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Markets ‘waking up’ to inflation threat and sending gold higher

Gold climbs on US inflation data but highs of 2020 still some way off
Markets ‘waking up’ to inflation threat and sending gold higher
  • Precious metals prices have room to run, says WGC chair
  • Miners still chasing share price increases through mergers and acquisitions

Macroeconomic rules say gold should be drawing in huge investment in this inflationary environment. But these rules also say a strong US dollar and equities are bad for the precious metal. The latter themes have won out in recent months, although gold has still held above $1,750 (£1,302) an ounce. It bears remembering the metal was trading at $1,500 an ounce two years ago and under $1,300 three years ago, and gold miners are seeing very high cash flow levels. 

Momentum has shifted in the past week, however, with gold hitting a five-month high of over $1,870 an ounce following the US Federal Reserve reporting a 30-year high for inflation for October, followed by a decade high inflation reading in the UK this week.

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