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Gold Prices Holding High Starting in June

Tuesday, October 19th 2021

Gold prices are currently holding at over $1,800 an ounce. This is a significant raise in value since the pandemic has caused a stir in all parts of the financial world. It is also the largest change that the gold market has seen in one month since June of 2008.

According to the U.S. Labor Department, the U.S. Consumer Price Index rose a total of .9% in June. That was .3% higher than the previous month’s rise and .4% higher than the projected rise. As of June, the headline inflation has risen 5.4% total.

Growth in almost all industries have been higher than normal in June. That includes a .4% growth in the food index, a 2.5% growth in the gasoline index and a 1.5% growth in the energy index. The price of used cars has also seen a decent increase.

The United States economy, as with many in the world, are starting to see recovery from the impact of the COVID-19 pandemic. Among that recovery is a continued growth in core inflation that we have not seen for years. The last time that we saw an annual inflation around 4.5% (the current one) was November 1991.

All of the rise in inflation prices that we have discussed above has shown to be good for the price of gold. Analysis performed by a variety of leaders in the financial world have shown that gold prices should continue to be supported too.

While there is a large number of professionals believing that the gold prices will continue to be supported, there are some that suggest that gold prices could struggle briefly as the interest rates may be changed by the Feds quicker than some expect.

This stems from announcements that the Federal Reserve could raise interest rates in 2023 due to updated projects. Those higher interest rates could come as soon as the later half of 2022, according to some economists.

Along with the skepticism, those same people are expecting the U.S. Central Bank to reduce its monthly bond-purchase program within the next couple of months.

The reason that most economists do not share the same perspective is the fact that they do not believe these threats will last long. Inflation threats will only be temporary.

By the end of 2021 we should have a better grasp on how the interest rates will hold for the following years. Part of this stems from the fact that we are starting to lessen COVID restrictions but many parts of the economy are still recovering.

Other parts have seen unprecedented growth, such as online businesses. Where do you think gold prices are going to go over the next few months and next few years?