Mentioned this on EVN board a week or so ago. Gold seems to have moved into a supportive environment driven by declining real rates. Through history it is not inflation by itself but rather the difference between inflation and prevailing interest rates coupled with government budget deficits that creates a supportive environment for gold.
Both the US Fed and the RBA made clear they are in no rush to increase interest rates until 2023 and obviously this comes at a time that inflation is strong and rising. The US inflation rate for Oct just hit 6.2% year on year and with interest rates of 0.25% they are looking at -6% real rates for October!!!. Even when rates do rise, 3-5% would create enormous strains on government budgets given the level of debt assumed over Covid and the GFC in 2008/09, they will do all they can to keep it between 1-3%.
The cynic in me would say, massive inflation, especially negative with real rates would inflate that government debt bubble away so I can see them letting inflation run hot for a while.
GOR Price at posting:
$1.55 Sentiment: Buy Disclosure: Held
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