Gold faces a tricky path as inflation and yields pull in opposite directions
AgenciesGold buyers face a mixed outlook after bullion ended July almost unchanged, with the World Gold Council saying a possible second wave of inflation would not guarantee a maj...
Gold prices remained relatively stable in July, ending the month at $4,027 an ounce, a 7.8% decline since the start of the year. Analysts noted that a potential second wave of inflation wouldn't guarantee a major rally in gold. The metal's current price is about 25% lower than its January record high of $5,405 an ounce. The World Gold Council emphasized that gold's next move would depend on how inflation impacts real interest rates, the US dollar, and economic growth expectations.
Factors such as demand from central banks and Asian investors, as well as potential strategic stockpiling and increased government spending related to AI, could influence the precious metal's trajectory. Near-term disinflation is possible due to a less robust US economy after the pandemic. However, a significant inflation surge could lead to tighter monetary policy and weaker economic growth, rather than a sustained inflationary breakout.
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