Inflation continues to dominate market headlines as consumers feel the real-world effects of rising prices. So what awaits the gold market in this environment?
According to Axel Merk, the Fed will not take the risk of creating a recession
As you can follow from the news on Cryptokoin.com on Friday, the US Department of Commerce Consumers got some good news after . .
Also on the inflation front, in its latest consumer survey, the New York Federal Reserve predicts that three-year and five-year inflation expectations will remain flat, though still high, as consumers predict prices will rise this year.
Merk Investment President and Chief Investment Officer Axel Merk describes the Federal Reserve’s precarious position as walking on the edge of a very narrow cliff. According to Merk, although the central bank wants to contain inflation, it will not risk creating a recession that markets are increasingly worried about.
Bill Ackman says the Fed must act aggressively now
Billionaire investor Bill Ackman, founder of Pershing Square Capital Management, says the US central bank must act aggressively now . Until inflation is satisfactorily addressed, investors don’t know how long it will take for the Fed to suppress inflation. In his statement on his social media account, Ackman makes the following assessment:
Uncertainty is the enemy of the markets, especially in the short term. By aggressively raising rates now, the Fed can protect and improve stock markets and the strength of the economy for all, while curbing inflation that is destroying livelihoods, especially the most unlucky.
What role will gold play in this environment?
According to analysts, however, the inflation data is giving the Federal Reserve some breathing space, so they will continue to speak out but still fall behind the inflation curve. Meanwhile, volatility will remain high and financial markets will be dispersed.
While gold will face tough headwinds from rising interest rates, its role as a safe haven and hedging inflation is not over yet. Axel Merk defines the role of gold in a portfolio as follows:
Gold is an asset you were always happy to have yesterday. But you’ll have no idea why you’re getting it for tomorrow.
