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Gold hit by perverse interest rate squeeze

At almost any other time a big fall in official U.S. interest rates would drive the gold price higher but since late last week, when it became clear that U.S. rates would be slashed as part of the coronavirus response, the gold price has fallen, a decline which has puzzled investors.

Gold hit by perverse interest rate squeeze Gold hit by perverse interest rate squeeze Gold hit by perverse interest rate squeeze Gold hit by perverse interest rate squeeze Gold hit by perverse interest rate squeeze

“The last time the market suffered a dramatic collapse in inflation expectations, with real yields rising rapidly despite steady nominal yields, was during the global financial crisis (2008),” Macquarie said.

One possible answer to this unexpected development is as worrying as anything to do with the virus which is choking global travel and trade and threatening to trigger a worldwide economic recession.