2023-04-13 17:30:41 ET
Gold prices pushed ahead to their highest level of the year Thursday, driven by bets that inflation will remain elevated despite recent declines.
Gold's rise this week even as two closely watched reports showed slowing inflation means investors are betting the Federal Reserve will cut back its campaign of interest rate hikes even with inflation readings well above the 2% target, which in turn comes from concerns that the economy may be weaker than it seems.
Analysts say such a Fed policy reversal could result in higher inflation becoming embedded in the economy in coming years, creating an environment that favors higher gold prices.
Front-month Comex Gold for April delivery settled +1.5% to $2,041.30/oz, a new 52-week high and the second highest close in history, just 0.5% below its record high of $2,051.50 hit on August 6, 2020.
The front-month gold futures contract has gained 12.2% this year, compared to the S&P 500's advance of ~7%.
ETFs: ( NYSEARCA: GLD ), ( NYSEARCA: GDX ), ( GDXJ ), ( IAU ), ( NYSEARCA: NUGT ), ( PHYS ), ( GLDM ), ( AAAU ), ( SGOL ), ( BAR ), ( OUNZ ), ( FGLD )
Gold also has been helped by the recent drop in U.S. Treasury yields, which has improved the appeal of holding gold.
"There has been a sudden, unexpected shift in investor sentiment to the broad belief gold is going higher. This is always cause for caution," Michael James McDermott writes in an analysis posted recently on Seeking Alpha .
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Gold rallies within $10 of all-time high as economic worries mount