Inflation continues to be a sharp sword for the gold market. Although inflation will keep real interest rates low, increasing consumer prices are met with expectations that the Federal Reserve will take aggressive steps to cool the economy.
Inflation, Federal Reserve and Gold Prices
The federal reserve wants to end monthly bond purchases in March. Markets are also waiting to see the first interest rate hike in March. Markets are pricing four interest rate hikes this year. In a last hawk movement, the Fed signaled that he could start to reduce his overly swollen balance sheet before the end of the year.
At first glance, they seem to be very important obstacles for the precious metals market. However, at the beginning of the new year, there is still a tendency to rise in gold and silver. Many analysts point out that the expectations that the Federal Reserve will lag behind the inflation curve, aggressive monetary policies, began to shift to their fears that the economy will lead to recession. According to analysts, once again, the Fed painted itself in a challenging corner that should be good for gold prices for the rest of the year.
Kriptokoin.comAs we have reported as the billionaire ‘Bond King’ Jeffrey Gundlach, 2022 ‘stagnation watch’ after saying that the headlines at the beginning of the week. The CEO of the Doubleleline said that the US consumer confidence and return curve data indicated a potential economic slowdown and said, ız We will be in the vigil as we have not been in the last two years, ”he said.
Consumers begin to see that their purchasing power is diminishing, which forces them to buy less products. Many analysts say that at the beginning of the year, increasing commodity prices and existing conditions may worse before healing.
Axel Merk, head of Merk Investments and Chief Investment Officer, said in an interview that gold, FED is in a very robust position as an important portfolio diversification tool, no matter what he does this year:
I am very happy where there is gold right now. I think gold found a solid foundation here.
