Gold Prices Surge as Interest Rate Fears Ease

The price of gold has risen again after months of decline, defying investor expectations.

In January, gold hit an all-time record price of more than $5,600 (£4,147) per ounce, but by mid-March it had fallen to just a few dollars below $4,000, a 28% drop from its high point.

However, since August, the precious metal has started to rally, increasing by 8% over the past week alone to reach $4,373.

Jemma Slingo, an investment expert at Fidelity International, notes that gold ETFs attracted inflows in July after two months of outflows, and the price of gold increased by more than 7% last week.

The changing outlook for interest rates could be contributing to the bounce, with analysts split over whether the Bank of England will raise interest rates. Higher interest rates can decrease the likelihood of people buying gold, as it is easier to get a return from holding cash since gold pays no dividend.