Inflation during Trump administration
Just as overall market sentiment is affecting precious metals, inflation figures have also had a significant impact. Under the Trump administration, the chances of rising inflation numbers seem higher. Plans for increased spending and possible interest rate increases make for a better outlook for inflation going forward. Gold is often considered to be a hedge against inflation.
When prices rise, investors can park their money in gold. At times, the price of gold and the inflation rate have a direct relationship and the hedge doesn’t hold. How well gold can protect investors against inflation remains unclear.
If inflation rises, there could be a stronger demand for gold. Markets have been watching the Eurozone’s inflation figures in the past few days. The consumer price inflation in the 19-nation Eurozone saw its largest rise since January 2013 at 2.0% for the last month.
Source: Market Realist