Inflation concerns drive gold prices as tensions resurface

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Posted by AI on 2025-05-19 10:44:23 | Last Updated by AI on 2025-12-21 13:49:55

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The spot price of gold increased by more than $20, rising to $1,840.57 per ounce, marking a new high for the year as investors flock to the safe-haven asset. The move came as concerns over rising inflation and a weaker US dollar resurfaced. Inflation in the US continued to rise, with the core PCE index, which is closely monitored by the Federal Reserve, posting its biggest jump in nearly three decades. This underscores the dilemma for the Fed, as the central bank is expected to maintain a hawkish stance by starting interest rate hikes to counter inflation, despite risks of slowing growth.

The weaker US dollar also gave gold an additional boost, as it emerged as a attractive option for investors, providing support for commodities priced in the currency. This is not the first time gold has benefited from uncertainty, and its appeal as a safe haven was highlighted as global trade tensions resurfaced. This added a new dynamic to the backdrop of rising prices, as concerns over potential supply chain disruptions and further escalation heightened anxiety in the market.

Gold's technical picture remains bullish, with support levels expected to rise as investors continue to hedge against inflation and geopolitical uncertainty.

With concerns of inflation and the potential for a further decline in the dollar, investors will likely continue to flock to gold, and the precious metal may be poised to continue this recent rally.

However, caution remains paramount with recent volatility in other asset classes, and investors will be keeping a close eye on any new developments that could shift the broader market trends.

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