Gold futures opened at $1899.60, traded to a low of $1896.30, and then recovered back above $1900 per ounce. As of 4:18 PM EDT gold futures basis, the most active June 2022 contract is currently trading up $9.30 and fixed at $1905.30. Gold’s reversal from its price decline over the last seven trading days is being supported by multiple factors and events.

As of 4:00 PM, EDT gold basis the most active June 2022 futures contract is currently just under $1900 at $1899.40. That is a net decline of $35 or 1.82%. The dramatic selloff in gold today did create significant chart damage with gold opening and closing below its simple 50-day moving average.

The Federal Reserve’s next FOMC meeting is just under two weeks away, and market participants are gaining insight from Chairman Powell and other Federal Reserve voting members. Recent statements by Chairman Powell have indicated a major shift in his position regarding inflation.

Chairman Powell had up until recent statements, maintained that inflation levels had peaked, were transitory, and would begin to decline. However, the newest information suggests otherwise. Inflation is currently at 8.5%, a 40-year high. More alarming is that recent data suggests it will continue to mushroom to higher levels.

Ask any investor or market participant whether gold prices have been steadily moving to higher prices based on rising inflation levels. However, that short trend came to a logical conclusion in trading today. Gold had a series of gains over the last five trading sessions finishing up with a gain of 1.5% on the week.

The combination of exceedingly high inflation and the geopolitical crisis in Ukraine were strong enough forces to run gold prices back above $2000.

Inflation is not limited to the United States. It is a global phenomenon prompting central banks worldwide to take action. Central banks worldwide are quickly moving to a more aggressive monetary policy in an attempt to stave off the spiraling international level of inflation.

Market participants continue to be extremely focused on the spiraling level of inflation and war in Ukraine more than their apprehensions about future actions by the Federal Reserve to aggressively raise interest rates this year. Yesterday’s release of the CPI for March which came in at 8.5% underscores concerns about a ½ a percent hike in interest rates by the Federal Reserve next month.

Today the BLS (Bureau of Labor Statistics) released its CPI inflation report for March 2022. The report showed that inflation had risen to 8.5% when compared to the inflation level in March 2021. When compared to month-over-month levels, inflation rose 0.6% as February’s level of inflation came in at 7.9%.

Gold prices have been affected by three primary factors, inflation, the war in Ukraine, and lastly, statements and actions by the Federal Reserve. Overwhelmingly, market participants are focused on the effects of spiraling inflation levels and the war on Ukraine providing bullish market sentiment for the precious yellow metal.