Inflation concerns sending investors back to gold as metal breaks downward trend

Gold doré

INFLATION concerns were pushing investors back to precious metals, including gold which reached its highest level in three months, said Bloomberg News.

“It seems inflation fears are finally translating into higher precious metals prices,” John Feeney, business development manager at Sydney-based bullion dealer Guardian Gold Australia told the newswire. “ETF investors are starting to swing into net-buyers again.”

Spot gold rose as much as 0.4% to $1,873.82 an ounce, the highest since January 29, and traded at $1,868.24 in mid-morning London trade. The gold price was trading at $1,866.63/oz at the time of writing. In rand terms, this was R841,308 per kilogram.

Bloomberg News said that investors will look to the minutes from the US Federal Reserve’s April meeting due on Wednesday for any sign policymakers may taper stimulus earlier than expected.

The newswire cited the Fed’s vice-chairman, Richard Clarida, as saying the US economy had not yet reached the threshold to warrant scaling back the central bank’s massive bond purchases. While Morgan Stanley expects the first warning of bond tapering to come in September – putting pressure back on gold – analysts at the bank said bullion has the potential to stay above $1,700 an ounce through the second half of the year.