Citibank: Once U.S. inflation is probed, it will force the Fed to raise interest rates, which may be detrimental to the outlook for gold prices;

1. Citigroup Inc. analysts pointed out that the recent strength of gold prices is mainly driven by the pressure on the US dollar index under the forecast of continued easing by the Federal Reserve. Low market interest rates have also made gold assets that do not generate interest more favoured by the market. However, the agency pointed out that once the inflation rate rises, the rise in gold prices may face the risk of exhaustion.

2. The agency pointed out that under normal circumstances, the expected value of gold with the function of holding value will be bullish, but once the inflation reality is implemented, the corresponding economic bottom change will be forced into an interest rate hike cycle, and market interest rates will rise accordingly. Gold prices constitute a negative.

3. Now, the Fed has no intention of tightening the currency, so the price of gold can still take the advantage of the east wind to skyrocket. But be alert to the prospect of a dramatic rise in inflation caused by the influx of excess cash into the real economy. At that time, gold may be sold in anticipation of interest rate hikes, and more funds will return to the bond market.