Gold could hit new highs again this year

According to David Lennox of Fat Prophets, Gold could test new highs again this year. Lennox says he is very optimistic about the price of precious metal.

Gold prices have been mixed in so far in 2021. Since the start of 2021, spot gold has increased by about 0.66%, although March stumble witnessed prices decline below $1,700 per ounce.

Gold firmed in the previous session and was on course for its biggest monthly rise since July 2020. The U.S. dollar headed for a second month of drop while growing inflationary pressures also raised bullion’s appeal.

Spot gold surged 0.3% at $1,907.90 per ounce, while U.S. gold futures surged 0.2% to $1,909.50. Spot prices have soared almost 7.9% so far this month.

Inflation in America is still in the spotlight as the central bank has been keeping the financial system flushed with cash. Since last year, the Federal Reserve has kept interest rates low and bought up Treasurys to stimulate the economy and keep financial markets afloat.

Higher readings of inflation are likely to support gold

Recent U.S. inflation data revealed prices were increasing as the core personal consumption expenditure index for April came in faster-than-anticipated on Friday. Notably, the measure is considered by central bank officials as the best gauge of inflation.

Lennox said that higher readings of inflation are likely to support gold.

According to him, inflation’s coming back because we’ve seen such a significant boost in U.S. money supply. Lennox added that whenever we’ve seen that surge in the past, it’s been accompanied by higher inflation.

In the previous session, the dollar index was headed for its second straight monthly slump against rivals. The U.S. dollar is anticipated to decline and could be another potential tailwind for gold.

Lennox said that rising debt, more physical money inside, and the U.S. dollar pool would imply that we’re going to see a weaker U.S. dollar going forward.