The unprecedented invasion of Ukraine and the rising inflationary pressures increased gold demand in the first quarter to the highest level since the fourth quarter of 2018. U.S. dollar gold prices climbed 8% in the last quarter, while demand for the yellow metal rose 34% year-over-year. The iShares Gold Trust (IAU) has gained 1.9% over the past six months versus the S&P 500’s 19.4% decline.
The U.S. inflation rose to 8.6% in May, posting a new 40-year high, which raised gold prices. As the World Bank raised the concerns that a recession might be hard to avoid for some countries, gold demand might start to attract more safe-haven asset demand. Moreover, U.K.-based precious metals research firm Metal Focus predicted that gold’s safe-haven demand could cause its prices to average at $1,830 an ounce this year, which would be a record high average price.
