According to independent analyst Ross Norman, "Inflationary rhetoric is finally being reflected in the price of gold." "There is a perception that the Federal Reserve is late in its decisions and actions."
Higher interest rates are generally considered bad news for gold as they drive up bond yields. “But an aggressive rate hike could ultimately be positive for gold,” said Saxo Bank's Ole Hansen. "They will increase the risk of Fed policy error while raising recession risks."
Retail sales of gold bars and coins rose to an 8-year high last 2021 and are expected to remain strong, the World Gold Council (WGC) said, as demand in key markets India and China rebounded. However, gold could be in trouble if bond yields - still extremely low by historical standards - turn positive, says Nicky Shiels, strategist at MKS Pamp.