Gold surged past US$2,000/oz earlier this week,[1] nearly reaching the previous 2020 record.[2] This time, though, it was driven by continued concerns about the war in Ukraine, swelling commodity prices, and, more generally, the potential implications for the global economy. And while the gold price has come down from the week’s high, it’s still approximately 4% higher month-to-date.[3]
Against this backdrop, we are addressing the three questions investors have asked us most frequently in recent days.
· What is the relationship between the price of oil and the price of gold, and what can the oil market tell us about gold’s future performance?
· How likely is it that the global economy falls into stagflation and how may gold perform in this environment?
· Could recent geopolitical developments, including the war in Ukraine, change the role of the US dollar in foreign reserves and global trade?
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References:
[1] The LBMA Gold Price PM reached US$2,039.05/oz on 8 March, while the gold spot price, given by Bloomberg’s XAU composite, saw an intra-day high of US$2,070.44 the same day.
[2] The LBMA Gold Price PM hit a historical record of US$2,067.15/oz on 8 August 2020, with the intra-day price (XAU) moving as high as US$2,075.47/oz the day before.
[3] Based on the LBMA Gold Price PM USD as of 10 March 2022.