The gold rate first dropped to $ 1813, but then partially recovered the lost positions, reaching $ 1825 per ounce. The yellow precious metal is a hedging tool for inflation, so it should come as no surprise that its quotes increase as the US currency depreciates.
So, the rise in inflation, which has been talked about so much lately, is finally reflected in a specific statistic. The injection of trillions of dollars into financial markets and the real economy in the form of fiscal and monetary stimulus is starting to take its toll on prices.
Rising inflation could trigger an increase in the Fed's interest rates. Similar considerations of investors and traders led to a decrease in precious metal quotes after the publication of these indicators. However, Richard Clarida, vice chairman of the Fed, tried to calm the markets by saying that the spike in inflation is temporary and will not require central bank intervention. If, nevertheless, an increase in rates occurs, it will hit the stock markets, increasing the cost of borrowed funds. Correction of stock indices will increase the popularity of the yellow metal as a defensive asset in the eyes of investors. Note that the publication of inflation data led to a correction of the Dow Jones, S&P 500 and NASDAQ indices by more than 2%.
If the inflation rate in the US continues to increase, and the Fed does not tighten its policy, then gold will have a chance to rise in price to the level of last year's record ($ 2067 per ounce) and higher. Therefore, while the precious metal is not too expensive, it's time to secure your financial position by converting some of the paper currencies into the main store of value in history.