Gold prices are buoyed by hyperinflation concerns. cryptocoin.com As we previously reported, the gold market seems to be reviving with the recent move above $1,800 an ounce as markets worry inflation is getting out of hand.
What do gold prices depend on?
The yellow metal rose $15 on Monday and extended gains above $1,800. December Comex gold futures were last traded at $1,808.60, up 0.72% on the day. Out-of-control inflation is the narrative that currently dominates the market, as investors seek safe assets to carry their money. Over the weekend, US Treasury Secretary Janet Yellen noted that high price pressures will continue until mid-2022 as she tries to reassure market participants that the US is not about to lose control over inflation. “I don’t think we’re about to lose control of inflation,” Yellen told CNN. On a 12-month basis, the inflation rate will remain high until next year due to what has already happened. But I expect improvement by the middle to the end of next year – in the second half of next year,” he said.
Yellen added that she expects supply bottlenecks to be resolved eventually. It’s a “temporary” pain, he said. “As we make more progress on the epidemic, I expect these bottlenecks to lessen. “As conditions improve, Americans will return to the workforce.” The International Monetary Fund (IMF) said in its latest report that the Federal Reserve should be ready to “act quickly” if inflation gets out of control. “Central banks should plan for possible action, explain clear triggers, and act on that communication,” said Gita Gopinath, IMF economic adviser and director of research.
What about inflation?
IMF’s Gopinath clarified his stance on inflation over the weekend and told CBS that inflation pressures will continue until mid-2022. “Inflation has indeed risen in the last few months,” Gopinath said. After falling last year, we’ve seen commodity prices rise again. But now we also see that the frictions between supply and demand do not match.” But the mid-2022 deadline doesn’t convince everyone, with new inflation warnings popping up every day. Twitter co-founder and Square CEO Jack Dorsey rang hyperinflation alarm bells on Friday. “Hyperinflation will change everything. It happens,” he tweeted.
Hyperinflation is going to change everything. It’s happening.
— jack⚡️ (@jack) October 23, 2021
“It will soon be in the US and around the world,” Dorsey added.
This comment triggered another debate among public figures about which assets offer the best refuge in these uncertain times. Michael Saylor, CEO of MicroStrategy, said: “The problem is inflation. The solution is #Bitcoin.”
Peter Schiff, chief economist at Euro Pacific Capital, refuted this view, pointing to gold and other real assets as the only solution: “Don’t expect to find a shelter in #Bitcoin. You need to have real assets to protect yourself from #hyperinflation. Deserves #gold, but not Bitcoin,” he tweeted.
Lawrence Lepard, managing partner of Equity Management Associates, suggested looking at Bitcoin, gold and silver: “Man’s desire to protect his savings will lead to a rapid decline in demand for dollar/fiat-based assets. Gresham’s Law will lead people to throw away money that isn’t solid like hot potatoes. BTC, Au, Ag. In a connected world, things can happen quickly,” he replied to Dorsey’s tweet.
All this talk of inflation is finally starting to help the lingering gold, according to analysts. Commerzbank analyst Daniel Briesemann said: “Gold is buoyed by rising inflation expectations. “Market-based inflation expectations in the US temporarily reached a nine-year high of about 2.7% on Friday,” he said. “In other words, markets are pricing in higher and higher inflation, and many market participants openly believe that the current level of high inflation is no longer just temporary. Gold should capitalize on this in its role as a store of value,” he added.
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