The gold price has been rising, reaching a record high at over $2,000 per ounce in April. This suggests markets see an imminent end to the rate rising cycle in the US and further falls in the Dollar. Buying from foreign central banks is also driving the gold price higher, as countries seek to diversify their asset bases away from Western government bonds.

Markets believe inflationary pressures are ebbing. In the US, March’s CPI data showed the level of inflation at a two year low, while lead indicators such as falling job openings and lower selling prices show core inflation starting to come down. The exception is the UK, where inflation remains stubbornly high.

The Dollar has been weakening in response to an expectation of slower rate rises from the Federal Reserve. This may continue as other countries, such as the Eurozone, continue to raise rates, Foreign exchange traders may also pay attention to the growing deficit in the US, which increasingly requires foreign capital to support it.