Long-term gold price remains supported by commodity-led inflation - Saxo Bank’s Hansen

After its strongest monthly gain since the start of the year, gold is testing support near $4,350 an ounce early in September. Spot prices last stood at $4,356.60, down more than 2%, as investors focus on short-term inflation worries fueled by rising commodity costs, said Ole Hansen, Head of Commodity Strategy at Saxo Bank.

WTI crude returned to $90 a barrel amid heightened US-Iran tensions, while the Ukraine conflict and global weather issues lifted grains and soft commodities including sugar, wheat and corn. The Bloomberg Commodity Agriculture Total Return Index jumped 12.4% in August to a 14-year high. Hansen observed: “In simple terms, the commodities creating the inflation problem have continued higher, while the commodities traditionally bought to protect against its consequences have fallen.”

The decline followed Fed Chair Kevin Warsh’s Jackson Hole speech reaffirming the 2% inflation goal, triggering higher rate expectations, yields and a firmer dollar. Gold and silver have dropped over 4% since Friday. Yet Hansen stressed that longer-term support endures from government debt, currency debasement concerns and central-bank buying, even as supply-driven inflation poses unique challenges for policymakers.