Gold prices benefit from growing fears of stagflation
The price of gold is gaining ground again, surpassing its high from the end of March at $1965, amid growing concerns of stagflation. Indeed, after the war in Ukraine, it was the turn of health restrictions in China to fuel these concerns. Although the Chinese authorities seem to want to relax them following strong opposition from the population, many companies have slowed down or even stopped their activities, which should further strain supply chains, fuel inflation and accentuate the economic slowdown.
The price of gold could continue to rise in the coming months, as the global economy is expected to slow more than expected. Indeed, consensuses often lag behind the evolution of economic trends. They tend to be overly optimistic when the economy slows down and overly pessimistic when it picks up.
The ounce of gold will start to come under pressure again when inflation starts to come out below expectations or when the global economy picks up speed.