Inflation in the UK rose to 2.7% in August, according to today's data from the Office for National Statistics. The initial forecast was for a drop from 2.5% to 2.4%, so today's data came as a surprise to investors when released by the ONS this morning.
The announcement means that inflation is at its highest level since February, and the news has since spurred investors to come back to the Pound ahead of an interest rate rise, which is now more likely in order to curb inflation.
The Pound climbed to $1.34 as investors made their moves in preparation for a future interest rate rise, while the price of gold dropped to just over £911 per ounce this morning, putting it at a loss of more than £51 per ounce in the past three months.
One last interest rate rise from the Bank of England was expected this year, so the rise of inflation isn't necessarily that much of a shock nor immediately impactful, but the fact it did the exact opposite to predictions has spooked some investors.
The strong Pound pushed the gold price down initially, touching as low as £910.28 within the past 24 hours, but the surprise statistics from the ONS, plus Prime Minister Theresa May's refusal to accept the EU's latest proposal re: the Irish border, have left investors fearful for any Brexit resolution, with many of those pessimists now turning to the safe haven of gold once more. The result is prices climbing back up to a peak of £918.38 today, though settling lower as investors debate which side of the fence to fall on; Gold or the Pound.