Gold price closed the week with a decrease of about 2%. However, many precious metals investors see the price action as a big victory. Because gold has managed to stand up to the most aggressive Federal Reserve in nearly 30 years.
Gold price remains relatively unchanged despite Falcon Fed
US inflation hit its highest level in 40 years last month. So the Federal Reserve had no choice but to raise interest rates by 75 basis points this week. At the same time, the central bank took more aggressive steps as it predicted interest rates would potentially rise to 3.5% by the end of this year and reach 4.00% by 2023. Also, Federal Reserve Chairman Jerome Powell said that inflation remains the biggest threat to the economy. On top of that, markets began pricing in another 75 basis point move next month.
Despite this hawkish sentiment, the gold price closed the week just below $1,850, a critical psychological level for last month. Overall, the price of gold continues to outperform stocks, despite closing the week in negative territory. The S&P 500 saw a weekly loss of 5% as it plunged deeper into the bear market zone. The gold price has remained relatively unchanged so far this year, while the broad stock index has dropped nearly 23%.
“Whatever the Fed does, gold will win”
Market volatility is one of the key reasons why gold has held its ground amid the Federal Reserve’s aggressive monetary tightening. Inflation continues to rise. On the other hand, the Fed’s hawkish stance increases the risks of the economy entering a recession.
State Street Global Advisors Chief Gold Strategist George Milling-Stanley said earlier this year that gold has nothing to fear from the Fed. The strategist also noted that this has proven to be true. Milling-Stanley emphasized this week that gold will win no matter what the Fed does.
Milling-Stanley also explained his views on how much gold an investor should have. The strategist said that research has shown that the optimal level of gold in a portfolio is around 10%. He also reminded that during turbulent times this level can double. And Milling-Stanley said, “If these aren’t turbulent times, then I don’t know what is.”
Societe Generale expects gold price over $2,000 for the third quarter
Milling-Stanley isn’t the only optimistic analyst on the market. Commodities analysts at Societe Generale see gold prices likely to rise above $2,000 in the third quarter. Analysts make the following assessment:
We expect monetary and fiscal policy to tighten. However, although not as fast as inflation, we are still supportive of gold in the very near term.
The debate over the best store of value between Bitcoin and gold is over!
Finally, the debate between gold and Bitcoin as the best store of value seems to be over. As you follow on Kriptokoin.com , Celsius Network has stopped all transactions on its platform. After this announcement, it has not been a good week for the cryptocurrency markets. Compared to this, it is possible to say that gold performs well.
The leading cryptocurrency Bitcoin has suffered a lot. The leading crypto broke the $20,000 psychological support over the weekend. In fact, it did not stop there, and it fell below $ 18 thousand. It rallied a bit at press time and went up to over $19,000. On the other hand, BTC has lost more than 60% of its value since the beginning of the year. Some analysts expect more pain in the crypto market as rising interest rates reduce market liquidity.
