Gold’s latest rally in March was largely due to fears over a Russian invasion of Ukraine, but there has been much more volatility since. The Fed has been aggressively hiking rates, while other market dynamics have come into play, including food and energy prices. As a result, gold’s price has plunged by 20% from its recent March high.
Rising interest rates have weakened gold’s appeal as an investment. The Bank of England recently raised interest rates to their highest level since 2008. Other central banks have also raised rates. These actions make a gold comeback unlikely in the near term. In order for gold to regain its former popularity, the inflation picture needs to shift drastically.
