Want more proof that investors are worried about inflation? Find out the price of gold and the US dollar value.
Gold is back above $ 1900 per ounce for the first time since early January. Meanwhile, the US dollar index gave up all his earnings for the year and fell almost 4% from its 2021 high at the end of March and is now near a 52-week low.
This is important because gold tends to rise when investors are worried about an overheating economy that causes consumer and commodity prices to soar.
Gold is on the rise amid “fears that recent inflationary trends may persist beyond the Fed’s ‘transitional’ forecast,” John Lynch, chief investment officer at Comerica Wealth Management, said on Tuesday.
And it’s bad news for the dollar, which tends to slide when gold is rising. Still, there is a silver lining to the soaring gold and the doldrums of the dollar. This is only happening because the US economy is rebounding from the depths of the Covid-19 recession.
“We anticipate the highest gross domestic product growth rates since the 1980s”, Joseph Brusuelas, chief economist at RSM US, said in a report, adding that US Treasury yields are also expected to rise, which will put additional pressure on the dollar.
“For these reasons, we expect the value of the greenback to experience noticeable volatility with slight downward pressure, causing the value of the dollar to fall against major trade currencies,” he added. .