Forget the pandemic – as if we could – the story of the second quarter was inflation, specifically US inflation, and its impact on the gold price. Indeed, a snap-shot survey from a US economics team informed us that just during the month of May, more than 100,000 press articles were published about inflation – far more than on the topic of COVID-19.

Fears of inflation pushed gold up by over 11% in the first two months of the quarter to top out at $1,907.70 on Tuesday, 1 June. But from then on, all movement was downhill as investors became concerned about the possibility of early interest hikes by the Fed and their concomitant impact on the cost of holding gold, and the possibility of the US central bank beginning to taper its quantitative easing programme sooner than expected.

In short, and in response to comments by Fed Chairperson, Jerome Powell who said in mid-June that higher inflation readings were temporary and were due to “shortages and bottlenecks and the like,” remarks echoed by ECB Head Christine Lagarde who added that “inflation is temporary and technical and will fade as we head into 2022”, the gold price fell through the month by -7.58%, its second worst June performance this century.

Gold % Price Moves in June (2000 - 2021)