Rising Inflation: War in Ukraine Creates Uncertainty: Gold Price Nears $2,000 | news

On Wednesday, the price of a troy ounce (about 31.1 grams) temporarily rose more than $12 to hit $1,979. Calculated in euros, the price of gold is also on the rise and is currently trading at 1,826 euros. Prices are hovering near one-month highs.

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Gold is currently being boosted by the high level of uncertainty due to the war in Ukraine and rising inflation rates around the world. According to Tuesday’s data, inflation in the United States hit 8.5%, a high of about 40 years. In Germany, the inflation rate is currently 7.3%, the highest level since reunification. Gold is traditionally seen as a hedge against currency depreciation.

However, gold surcharges are limited by rising interest rates in capital markets. Since gold is an interest-free investment and therefore does not generate any regular income, an environment of rising interest rates weighs on the demand for gold. Real interest rates – that is, nominal interest rates minus inflation – are also rising, but mostly remain clearly in negative territory. The latter somewhat eases the pressure of interest rates on the price of gold.



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