After a one-day delay, the S&P 500 once again sees heavy selling pressure, while the gold market continues to benefit from market volatility as prices remain above another critical resistance level at $1,850.
“Gold prices expected to drop significantly by the end of the year”
As the broad stock market index continues to fight and flirt with bear market territory, economists and market analysts The chorus of negative emotions between them grows. Many analysts expect gold prices to fall significantly by the end of the year.
In a recent report, market strategists at Société Générale warn investors that stocks may be prone to rallies. However, they add that S&P is facing a tough uphill battle.
“US economy faces increasing risks of stagflation”
The French bank also stated that inflation remains stubbornly high and puts pressure on growth prospects. He also reminds us that the US economy is facing increasing stagflation risks due to Analysts make the following assessment in their latest report:
The most important leading indicators are the ‘risk removal’ understanding (long USD, US 10y, flattening of the yield curve) and our belief in focusing on tail risks, especially ‘stagflation’. supports.
BofA recommends increased energy sector purchases
Market analysts at Bank of America (BofA) also see the specter of stagflation. Analysts say renewed weakness in equity markets may indicate investors are now less focused on rising interest rates and more concerned about slowing economic growth. Bank of America predicts the S&P will drop below about 3200 points this year.
Candace Browning, Head of BofA Global Research, said in a note Sunday, “This overlaps with the typical top-to-bottom S&P 500 recession drop.” The bank advises investors to increase their energy sector purchases on broad commodities as a hedging instrument. “We prefer to take an extreme position on energy, which is fueling demand for services and taking advantage of war, from low US supply,” analysts say.
“We’re ready to drop from a top to bottom of at least 30% in major indices”
Market analysts at CrossBorder Capital, Federal He predicts the S&P 500 will fall to 3,250 as reserve tightening continues to draw liquidity from the market. Analysts comment, “They are aiming to make the dollar scarce for both domestic inflation and international geopolitical reasons, and as always, they will tighten it until something breaks.” Analysts market expectation is as follows:
If we consider the stock price decline in conjunction with the lower P/E multiples to the first leg drop in the market, then this second leg drop may be more likely due to a crash in earnings. We seem ready to drop from a top to bottom of at least 30% in major indices.
“Gold does its job well despite facing tough winds”
Kriptokoin.com In the current environment, some market analysts continue to view gold as an important market diversifier and hedging tool against falling equity markets. Gold prices are significantly outperforming the S&P 500. The broad market index has dropped 18% this year; meanwhile, gold trading above $1,850 is up more than 1%.
Merk Investments President and Chief Investment Officer Axel Merk says in a recent interview that gold continues to do its job despite facing tough headwinds as real interest rates turn positive. He adds that rising inflation and market instability will continue to support gold prices. He also states that the Federal Reserve is an intermediary, which is not good for risky assets.
“Fed’s aggressive approach can act as a major roadblock for gold”
However, despite the new momentum of the gold price, some Analysts still see precious metal transactions in a wide range. According to FXTM Senior Research Analyst Lukman Otunuga, several key themes continue to attract and push gold prices, dictating the short- and long-term outlook. The analyst states that these include recession fears, inflation fluctuations, Russia-Ukraine developments, the Covid-19 crises in China and the Fed’s increase expectations. Lukman Otunuga points out the following after his assessment:
While gold appears to be on the rise, the Federal Reserve’s aggressive approach to higher interest rates could act as a major roadblock for the zero-yield yellow metal. Technically, a break above $1,855 could trigger a move towards $1,885 and $1,900. Continuing weakness below $1,855 appears to open the doors to $1,820 and $1,800.
