Gold hits highest level in three months as traders worry about US inflation and bond market jitters – business live
Gold has climbed to its highest level since mid-May, with spot prices touching almost $4,700 an ounce before settling around $4,649, as investors grow anxious about the outlook for US inflation and turbulence in the bond market. The rally follows last week's move by the US Treasury to double its purchases of longer-dated debt in an attempt to soothe a bond market rattled by rising yields, with attention now turning to upcoming US inflation figures and a speech by Federal Reserve chair Kevin Warsh for signs on the future path of interest rates.
Bitcoin also surged past $80,000 for the first time since May, up more than a quarter in a week, though still well short of last year's $126,000 peak, while ether rose to $2,503. Elsewhere, traffic through the strait of Hormuz fell to its lowest daily level since early May amid tensions after Iran blacklisted 45 tankers, even as markets largely brushed off the threat of fresh US sanctions under Washington's newly launched "Operation Economic Outcast." Brent crude slipped to $91.41 a barrel, Asian shares were broadly higher, and Germany confirmed its economy grew 0.3% in the second quarter, slightly better than initial estimates, driven by exports.
- Gold hits three-month high on US inflation and bond market worries
- Bitcoin tops $80,000 for first time since May
- Germany's economy grew 0.3% in Q2, beating initial estimate
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Gold has jumped to its priciest level in three months, with the price of an ounce nearing $4,700 before easing back slightly. Investors buy gold when they are nervous about the economy or about holding cash and bonds, so the rise reflects growing unease over the direction of US inflation and instability in the bond market, where the price of government debt has been swinging sharply.
The bond market turmoil is linked to the US Treasury's decision last week to buy back more long-dated government debt, an attempt to calm things down after yields (the returns investors demand for lending to the government) had been climbing. Markets are now waiting on fresh US inflation data and a speech from Federal Reserve chair Kevin Warsh, since the Fed sets US interest rates and its decisions strongly influence borrowing costs, investment returns and the wider economy.
The story also touches on other market moves happening at the same time, including a rally in the cryptocurrency bitcoin and tensions around the strait of Hormuz, a key shipping route for oil between the Middle East and the rest of the world. These are presented as part of a broader picture of financial markets reacting to economic and geopolitical uncertainty, rather than as directly connected events.
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