In the past six months, inflation has become much more of a concern for Americans. In February, record inflation was observed with the CPI indicating a 7.9% increase year over year, a number not seen in 40 years. Obviously, inflation makes everyone nervous, but it especially makes investors nervous. We do not know if this period of inflation will be short lived or longer term, but in the meantime, the price of gold is rising. Does the relationship between inflation and gold prices tell us anything?
Inflation and Gold Prices
In the past few months, the price of gold has increased - briefly hitting $2,070 an ounce - but it has also experienced some volatility with announcements by the Federal Reserve about interest rates and the war in Ukraine and sanctions against Russia both escalating. Obviously, there’s more going on than just inflation, but in insecure times people tend to look to gold as a hedge or a safe haven.