After rallying at the start of 2017, the gold price has fallen back over the past couple of weeks, as some of the geopolitical risks that had lent it support earlier in the year have subsided. A revision of expectations for further monetary tightening in the US this year has also contributed to the recent fall in prices. Indeed, the likelihood of a June rate hike has shot up to 97% after Wednesday’s FOMC meeting. That said, the decline in the price of gold has come at a time when most of the more industrial commodities – and oil in particular – have also fallen sharply. While this might sound surprising given gold’s traditional role as a safe haven, historically there has been a strong positive relationship between the price of oil and that of gold. This is due to the fact that both commodities are considered hedges against inflation.
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