In today’s video CPM Group’s Jeffrey Christian analyzes US Inflation data following the release of the January 2023 U.S. CPI report. While inflation remains problematic, it continues to moderate and decelerate. Jeff also discusses the relationship between gold and inflation. He notes that while inflation is an important factor for gold and silver prices, it is not the sole determinant. The correlation between gold prices and US consumer inflation has been 9% since 1970, but was negative 4% from 1990 to 2021 as gold prices rose sharply in an absence of inflation. While people overemphasize inflation’s impact on gold, it is only one factor among many that influence gold prices.

As we enter 2023, the conversation around inflation and gold prices remains at the forefront of economic discussions. After a tumultuous year in 2022, investors are looking for guidance on how to navigate the current economic climate. In this article, we will explore the relationship between inflation and gold prices, examining historical trends and current market conditions.

The Impact of Inflation on Gold Prices

Inflation is often seen as one of the key drivers of gold prices. As the value of currency decreases, investors look to alternative assets, such as gold, to maintain the value of their portfolios. When inflation is high, gold prices tend to rise, as investors seek to hedge against the eroding value of their investments.

However, the relationship between inflation and gold prices is not always straightforward. As Jeffrey Christian notes in his analysis, the correlation between gold prices and US consumer inflation has been 9% since 1970, but was negative 4% from 1990 to 2021. During this period, gold prices rose sharply even in the absence of inflation.

While inflation can certainly impact gold prices, it is just one factor among many. Other economic and geopolitical factors, such as interest rates, currency exchange rates, and global economic growth, can also influence gold prices.