As inflation surges, the price of gold has soared above $1,870 per troy ounce, its highest in five months while the US dollar also touched its highest level since July 2020.
Spot gold rose 0.9% to $1,866.83 per ounce, having dropped in the previous two sessions after a seven session rally. US gold futures also gained 0.9% to $1,868.80.
The US dollar which is also a safe store of value has also hit a 16 month high.
A stronger dollar makes gold more expensive for buyers holding other currencies, while higher yields increase the metal’s opportunity cost.
Rate hikes weigh heavily on gold as higher interest rates raise the non yielding metal opportunity cost.
The physical demand is also encouraging with China imports averaging 25 tonnes as against 10 tonnes last year.
