The demand for gold has been surging for months thanks to ongoing, record-high inflation, the conflict between Russia and Ukraine, and Fed rate hikes. New data from the World Gold Council showed that the physical demand for the safe-haven asset jumped 34% year over year. That’s the highest quarterly demand increase the gold market has seen since 2018. In other news, Americans will be keeping a close eye on the Fed this month. Chairman Jerome Powell has said the central bank is ready to become more aggressive with interest rate hikes to deal with hot inflation and surging labor costs.
Fortune via Kitco News/Will Daniel
Soaring inflation drives up gold demand by 34% as investors scramble for a safe haven
Investors looked to gold to protect their hard-earned savings in the first quarter of 2022 as record inflation pummeled other investment vehicles.
Physical demand for the safe-haven asset jumped 34% year over year to 1,234 tonnes in the first three months of 2022, according to a report from the World Gold Council released Thursday. That’s the highest quarterly demand increase the gold market has seen since 2018.
“There will be more demand for gold as a safe haven as long as the world is in disarray and as long as the war is raging in Ukraine,” Kevin Rich, a global gold market adviser to the Perth Mint, the official bullion mint of the government of Western Australia, told Fortune. “Until the Fed can really get their arms around inflation, gold demand as a hedge should be there.”
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Reuters via U.S. News/Lindsay Dunsmuir and Ann Saphir
Big Fed Rate Hikes Ahead, Amid Early Signs Hot Inflation Is Peaking
U.S. Federal Reserve policymakers look set to deliver a series of aggressive interest rate hikes at least until the summer to deal with hot inflation and surging labor costs, even as two reports Friday showed tentative signs both may be cresting.
Sharply higher food and gas prices lifted overall inflation to a new 40-year high of 6.6% in March, data from the Commerce Department showed. At more than triple the Fed’s target, hot inflation is why the central bank is widely expected to ramp up the pace of rate hikes with a half-point increase at each of its next three meetings, and continue raising rates through the end of the year.
Contracts tied to the Fed’s policy rate now show heavy bets on interest rates rising to a range of 3%-3.25% by the end of the year, putting borrowing costs well into territory U.S. central bankers believe will put the brakes on growth.
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The Atlantic/Annie Lowery
Why Everyone Is So Mad About the Economy
Inflation is an everyone problem and unemployment is a some-people problem.
Keep that fact in mind as good-to-great headline economic numbers keep rolling in and economic sentiment remains abysmal. This week, the Commerce Department reported that real GDP fell 0.4 percent in the first quarter of the year, largely because of fluctuations in inventory orders and international trade. Consumer spending and business investment both looked strong, indicating an economy growing a tad faster than it did last quarter, not one teetering on the edge. Employment data look even better: Companies added 431,000 employees to their payrolls in March, with the jobless rate falling to just 3.6 percent.
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