Friday Mood by Véronique Riches-Flores.
Gold is rarely popular with investors. Non-yielding assets, when taking advantage of tailwinds it is most often out of desperation to find a profitable source of investment, which is never a good sign. However, its store of value quality gives it this allure, which is particularly sought after in times of inflation. Thus, deliberately neglected when central banks appear to have the power and means to control them, they are never slow to take advantage of a renewed interest when doubt is instilled in their supervision. At a time when the Fed’s pressure for a pivot seems likely to prevail, the renewed vigor of the precious metal is making its voice heard.
Triggered by speculation over rumors of China’s zero-Covid easing late last week, gold prices rebounded to $131 from the previous day’s 18-month low; an 8% rise all the more notable as it occurred despite a strong recovery in risk appetite on the financial markets.
It is tempting to see in this movement a message that monetary authorities would do well to heed. Because, beyond what draws the immediate attention of the markets, i.e. what the Fed will decide at its next FOMC on December 14th, it is precisely the longer-term developments in inflation that seem to call into question this sudden bullion of the precious metal.
