The spot price of gold experienced a decline on May 13, reversing a two-day rally amidst apprehensions about inflation and its potential effects on the Federal Reserve’s interest rate stance. Consumer expectations of higher price increments over the upcoming year intensified in April compared to March, as revealed by a survey from the Federal Reserve Bank of New York. Gold emerged as the primary inflation hedge identified by respondents, followed closely by big tech stocks.
Gold Price Decline Amid Inflation Concerns
The spot price of gold dropped approximately 1.1% to $2335.53 per ounce by 4:30 p.m. ET on May 13. This decline was attributed to growing worries regarding inflation and its anticipated influence on the Federal Reserve’s approach to interest rates. Findings from the Federal Reserve Bank of New York indicated a surge in consumers’ short and long-term inflation projections for the year.
Consumer Inflation Expectations
According to a study conducted by the New York Federal Reserve, consumers in April revised their estimations of short and long-term inflation rates upwards. The survey showed that respondents expected a 3.3% annual inflation rate in one year, higher than the 3% projection from March. Additionally, the anticipated inflation rate for five years increased to 2.8%, up from 2.6% the prior month.
Perception of Gold as an Inflation Hedge
Despite the volatility in the market, gold sustained its reputation as the most favored hedge against inflation. A recent Bloomberg survey highlighted that 46% of participants regarded gold as the best asset to shield against inflation, while 30.4% opted for U.S. tech-giant stocks like Nvidia. Notably, Bitcoin garnered 5.1% of the responses, with other alternatives capturing 18.1% of the poll.
Original article: “Gold Price on May 13 Rate Slips Amid Concerns About Inflation” https://www.investopedia.com/gold-price-on-may-13-rate-slips-amid-concerns-about-inflation-8647622
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