Gold price jumped above $2,010, reaching the highest level since March of last year. However, economists at Commerzbank believe that the yellow metal could correct lower if higher Oil price sparks inflation fears.

Gold price benefiting from economic concerns

“Gold's strength was by no means intuitive: after all, the significant rise in the Oil price brought about by the decision taken by the OPEC members pushes up inflation, whereas the fall in the Purchasing Manager’s Index points to faltering economic momentum, which should ease price pressures. The reaction should therefore come as a surprise in the former case in particular.”

“Doesn’t higher inflation point to higher interest rates, which should weigh on the Gold price? This was probably not the market’s first thought, however. Instead, its first reflex was presumably to switch to ‘crisis’ mode and focus on possible economic risks.”

“It cannot be ruled out that the Gold price will shed at least some of the gains it chalked up yesterday if the higher Oil price sparks inflation fears and thus rate hike speculation.”