Inflation is prone to Delta – the same with gold?

Delta variant caused fresh supply-chain disruptions. Effects? Slower growth and higher inflation. Sounds like a perfect mix for gold!

The Delta variant of the coronavirus is spreading all around the world. Although it won’t affect the world economy as much as the first wave of the pandemic, it will add to the already existing problems. Namely, the rising number of new cases will prolong the supply disruptions, hampering the GDP growth and strengthening the already high inflation (see the chart below).

In particular, last week, the Ningbo-Zhousan port in eastern China was partially closed until further notice after its worker was infected with the Delta strain. The problem is that it’s the world’s third-busiest cargo port, so its closure will cause fresh pressure to the already disrupted shipping industry.