Gold soars on inflation and interest rate fears

Fresh concerns about inflation and interest rates unsettled US and European equities on Wednesday but helped drive the price of gold to its highest for nearly a quarter of a century.

Lena Komileva, G7 market economist at brokers Tullett Prebon, noted that recent comments from Federal Reserve officials had done little to dissuade the market that US monetary policy was getting close to neutral.
“However, interest rates are still seen to be near the bottom end of the ‘neutral range’, which means there are more rate hikes in the pipeline,” she said.

“In the meantime, inflation remains a concern, which has given rise to the view that the Fed will continue to hike rates to 4.75 per cent.”

By midday in New York, the Dow Jones Industrial Average was down 0.1 per cent, the S&P 500 was 0.2 per cent lower and the Nasdaq Composite was off 0.3 per cent.

Financial Times