New Inflation High Boosts Gold

At the end of 2021, many investment banks forecasted that inflation would start to slow down from Q2 2022. The data published yesterday proves just the opposite: a new increase in prices on both a monthly and a yearly basis.

The monthly data saw an increase of 0.3% (below analysts’ average forecast of 0.5%), while the YoY figure jumped to an impressive +8.5% (+0.6% compared to the +7.9% of February 2022).

Of course, the massive rise in commodity prices – particularly oil and gas – was a crucial catalyst in last month’s price rally but there is no certainty that this scenario will change in the short term.

Live Gold ($/g) Price

With just three weeks to go before the next Federal Reserve meeting, investors are pretty sure that the U.S. Central Bank will increase rates by 50 basis points (from the current 0.50% to 1%).

Indeed, according to the CME FedWatch tool, markets are pricing a probability of 86.6% of a 0.50% rate hike in May. Only 30 days ago this percentage was just above 40%.

In this scenario, the gold price is continuing to show strength, remaining above the key support level of $1,950/1.960. A sustained move above this threshold could open the way for further recoveries, with the key level of $2,000 that seems much closer than a few days ago.

Even if the U.S. rates rise in the next few months, the surge in prices and the potential risk of hyperinflation is still boosting investors’ interest in gold as a prospective hedge against inflation.

Looking at the price in dollars per gram, bullion is now traded above 63, while its price in euros per gram is above 58.

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Carlo Alberto De Casa is an external Market Analyst for Kinesis Money.

He also writes as a technical analyst for the Italian newspaper La Stampa.

Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis