Gold is waking up. The exchange rate jumped due to inflation

Over the next twelve months, the precious metal could break historical records, according to the agency Bloomberg Sean Boyd, head of Canadian precious metal miner Agnico-Eagle Mines. Last August, gold looked just under $ 2,100. “Inflation is not temporary. Gradually, we will see its acceleration, which is generally very favorable conditions for gold, “explains Boyd.

The sharp overnight rise in the price of yellow metal occurred after the publication of inflation in the United States. The figure of 6.2 percent represents the highest year-on-year price growth in the USA in thirty years. According to the agency Reuters however, the central bank still hopes that price increases will ease over time as pandemics of disrupted supply ties around the world resume.

At the same time, the Fed believes that there will be no need for a significant increase in rates, which, according to Reuters, is all the more difficult to believe the longer, according to central bankers, only temporary inflation lasts.

When to expect inflation to ease? In the Governor’s Eyes program, CNB chief Jiří Rusnok answers:

Despite long-term low interest rates and significantly rising inflation this year, however, the development of the price of gold has so far fallen short of the expectations of many of its holders. While stocks or cryptocurrencies have repeatedly exceeded their highs this year, ounces of gold cost about $ 50 less than at the beginning of the year.

“Not that I don’t believe in gold now, but I thought its price would be much higher. It turns out that for the younger generation, bitcoin is similar to gold. They see the cryptocurrency as a digital version of gold and see that the surrounding world is also becoming more and more digitized. Millennials don’t want gold, ” he means Bloomberg Commodity Expert Mike McGlone.

Gold price development:

However, his view has limited validity, at least in Central Europe. In the first half of this year, the Germans bought 90.5 tons of gold, the most since the financial crisis in 2009. According to the World Gold Council, German purchases in the first six months slightly exceeded last year’s strong first half.

Web Tagesschau televize ARD saidthat the Germans clearly dominated the European ranking of precious metal buyers. The Swiss and Austrians followed. Globally, only one nation had a greater golden appetite, the Chinese. The trend is also evident in the Czech Republic during the pandemic.

The price of gold and when to best invest.  A brief overview

The demand for physical gold at the largest domestic trader, Golden Gate CZ, increased more than 2.5 times year-on-year last year during the autumn quarantine measures. The situation from the spring lockdown was repeated, when interest more than doubled.

But some portfolio managers warn against betting on gold. “I would avoid him. Although the yellow metal represents an anti-inflationary insurance, we must not forget its vulnerability to an increase in real bond yields, “said Tomáš Pfeiler from Cyrrus at E15 Premium Investment Advisory Board during the spring.

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