According to estimates provided by Refinitiv, gold may surge in the near future. Experts foresee a rise in gold prices amid inflation growth.
In August 2020, the precious metal jumped to a record of $2,063 per troy ounce. At the moment, the asset is trading at the level of $1,877 per troy ounce. Richard Kelly, a head of Global Strategy TD Securities, supposes that now gold prices are rather low, but they have enormous potential for a rise.
In the first months of 2021, gold was under pressure from a sharp increase in the US treasury bonds. Most traders bet that the US Fed would raise the key interest rate and tighten its monetary policy because of growing inflation. Notably, in April 2021, the US inflation skyrocketed to 4.2% and consumer prices beat a 10-year record. It was the biggest reading since the financial crisis of 2008.
However, the regulator kept its policy unchanged. As a result, the US dollar fell and investors turned to gold. Importantly, the precious metal has always been considered as a protective tool against inflation. Any attempts to halt inflation growth have a negative influence on gold prices. Since the precious metal is denominated in US dollars, a decline in the currency leads to higher gold prices.
