After a turbulent June that erased gold’s gains, the precious metal hit a month-long high in price of $1,825/oz on Wednesday, and has continued inching up since.
As of mid-day Thursday, the spot gold price sat at $1837.80/oz.
The rise comes on the heels of Federal Reserve Chair Jerome Powell’s downplay of concerns about early easing of monetary support. This caused 10-year US treasury yields to lower and the dollar to dip.
“The tapering is not yet in the cards and the Fed will continue with its bonds purchases. Therefore, we are likely to see more of liquidity in the market which at the end will be helping gold prices,” Commerzbank analyst Eugen Weinberg said.
He continued: “At the moment gold prices are likely to consolidate around current level. But we do expect acceleration of the price increases will happen towards the year end.”
Much of June’s turbulence was the result of tough posturing during the June Federal Open Committee Meeting, and the rapid recovery of the metal seems to align with what industry experts like Sprott Managing Director John Hathaway have envisioned.
“The June selling was almost entirely a knee-jerk synthetic affair driven by algorithmic, headline scanning robotic macro funds,” he explained.
Inflation concerns have grown this week with June prices up 0.9% over May. This is the highest month-over-month increase since April of 2008, which saw a 1% jump.
During a July 13 earning call, however, JPMorgan CEO Jamie Dimon said that inflation “could be worse than people think.”
Gold can act as a hedge against inflation, and investors looking to directly access physical exposure to the yellow metal can hold gold bullion with the Sprott Physical Gold Trust (PHYS).
Sprott also offers two actively managed precious metals mining ETFs: the Sprott Gold Miners ETF (SGDM), which tracks gold majors, and the Sprott Junior Gold Miners ETF (SGDJ), which tracks junior gold miners.
Mining companies tend to do well as the gold price rises because they can receive more revenue and profit for the metal that they mine.
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