Gold price rises in the slipstream of oil

Although gold long failed to profit from the weaker US dollar and falling equity markets yesterday, falling for a time to $1,125 per troy ounce, it is trading back above $1,140 this morning. The significantly higher oil prices (see Energy) are clearly playing their part in the price rise, as they generate expectations about inflation. 

"The Eurozone inflation rate for example did not fall any further in August, contrary to expectations. That said, the marked rise in oil prices of late could prompt the US Federal Reserve to hike interest rates at its next meeting in September after all", says Commerzbank. 

Although this would put pressure on the gold price in the short term, it would put an end to the uncertainty and cliff-hanger suspense surrounding the time of the first rate hike, with the result that one key factor weighing on the gold price would fall away.