The Federal Reserve is walking a very narrow path to the edge of the cliff, making stock investors very nervous. However, according to analysts, the gold market remains stable in choppy waters.
“We don’t think the ‘Fed put’ will come into effect anytime soon”
Investors are fleeing stocks as inflation takes a bite out of corporate profits, according to reports. At the same time, the Federal Reserve is trying to cool inflation by slowing the economy through aggressive rate hikes. Federal Reserve Chairman Jerome Powell reinforced the hawkish outlook by saying that the central bank will do everything it can to contain inflation.
Due to this stance, some analysts think the S&P could fall further. Thomas Mathews, market economist at Capital Economics, said in a note Thursday:
We don’t expect the pressure on valuations to ease any time soon. While headline inflation has peaked, the Fed is still clearly annoyed given how well above target it is, as Powell highlighted earlier this week. In our view, the Fed will not back down significantly from its tightening plans until inflation is much more under control. In other words, we don’t think the ‘Fed put’ will come into effect anytime soon.
“This is an indication that the price of gold has bottomed”
Now, the big question investors are asking is whether the Fed itself whether he is prepared to make a ‘policy error’. In a recent report, Degussa chief economist Thorsten Polleit says the Fed’s soft landing plan is getting harder as the world continues to grapple with record debt.
The Economist notes that at the end of 2021, worldwide debt accounts for 351% of global GDP, commenting:
Especially given record global debt, The risk of something going wrong is too great.
As you can follow from the news on cryptokoin.com , the gold market continues to face strong headwinds from the US dollar. However, analysts say that gold is once again seeing renewed investor interest as a safe-haven asset. Some see the gold price slump below $1,800 earlier last week as an indication that the precious metal has found a bottom.
