Gold Prices Surge As U.S Inflation Heats Up – What’s Next?

Gold prices surged on Tuesday from their lowest level in more than a week after a sharp rise in U.S inflation boosting the metal’s appeal as an inflation hedge.

The Consumer Price Index, which measures the change in what customers pay for goods and services such as groceries, clothing and gas, climbed 0.6% in March – it’s biggest monthly increase since August 2012. This report follows last week’s PPI data, which showed producer prices rose 4.2% annually, the fastest pace since September 2011.

The U.S government and Federal Reserve’s massive quantitative easing programs have started to draw criticism and raise concerns about the long-term risks of overspending and overstimulating the economy at such an aggressive pace.

Inflation will remain the hot topic this week with Federal Reserve Chair Jerome Powell speaking at the Economic Club of Washington on Wednesday.

So far, Jerome Powell has artfully dodged questions relating to the rapid rise in inflation, stating that any price acceleration will be temporary. But policy makers will have to address this problematic issue eventually before it snowballs into something they can no longer control.

Another macro event that has lend support to gold prices this week was news that U.S health officials’ have halted the use of Johnson & Johnson’s COVID-19 vaccine, due to blood clotting occurrences in a few recipients.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.