This is why gold is below $1,800 even as U.S. inflation hits a 40-year high at 9.1%

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However, some analysts note that gold's relatively disappointing price action makes sense within a broader market scope. In a recent interview with Kitco News, Ole Hansen, head of commodity strategy at Saxo Bank, said noted the discrepancy between inflation and the one-year/one-year breakeven rate of below 4%. At the same time, the five-year/five-year breakeven rate is hovering around 2.6%.

"Our forecast to get the ceiling for the fed funds rate up to 3.25% this year, combined with higher prices dampening consumer demand in discretionary areas of the economy, should produce enough of a growth slowdown to quell inflation in 2023 and to prevent a de-anchoring of inflation expectations," she said.

However, the question remains if a recession will cause enough demand destruction to impact the significant global supply issues. He added that this will determine just how persistent inflation will be through 2023. According to inventory data, LME warehouses held just 696,109 tonnes of registered copper at the end of June. Analysts have said that this is the lowest level seen this century.

This is why gold is below $3,000.

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U.S. inflation hits new 40-year high in June as gas, food prices surgeU.S. consumer prices soared 9.1% compared with a year earlier, further pressuring households and likely sealing the case for another large interest rate hike I thought it was transitory. Central Bankers need to stop taking baby steps of 50-75bpts increase. Their key mandate is Inflation & it requires Volker shock just raise 250-300bpts
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