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Gold prices within reach of new highs as markets process inflation news

Gold has been trading within reach of new all-time highs this week as we head into the Easter weekend, with prices just shy of £1,531 ($2,000) on Wednesday. This price reflects just how much momentum the gold bulls are carrying right now, as markets elsewhere digest the implications of inflation hitting a new forty-year high.

The 0.25% gain on Wednesday comes as the Federal Reserve prepares to roll out the first in a series of planned rate hikes which it hopes will bring down inflation. The issue for the Feds is that an increasing number of observers believe that a recession could be triggered – if you caught our Wednesday Bulletin you’ll know that Bank of America is the latest to add its voice to those warnings.

Nicky Shiels, metals strategist for MKS PAMP Group said, “If this really is ‘peak inflation’ coupled with impending back-to-back 50bp Fed hikes, gold should be trading very defensively… it is not. Prices are up £22 ($30) since the CPI print as it harnesses the oversimplified view that ‘high inflation prints = higher gold’ program instead of the ‘high inflation = hawkish Fed = lower gold’ one.

What’s clear is that gold still has a lot further to go as the Federal Reserve faces a supremely tricky balancing act.

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