Juan Carlos Artigas, head of global research at the World Gold Council (WGC), says there are currently two competing forces in the gold market. In an interview with Juan Carlos Artigas, he states that gold will find support as a hedge against inflation as investors try to hedge themselves against the rising cost risk. For details of the news cryptocoin.com read.
“Interest rate hikes could create a headwind for gold”
The head of research states that another factor driving the precious metal is the opportunity costs associated with the speed and strength of rate hikes, which could create a headwind for gold. However, Artigas is of the view that the risk of higher inflation will outweigh the opportunity cost as inflation may become more persistent. In addition, he notes, the effect of higher interest rates could be priced in “to some extent.”
Juan Carlos Artigas says in the results of a recent WGC survey that many gold and non-gold institutional investors are looking to increase their gold holdings over the next three years. He also notes that some firms are trying to structurally change their strategies to adapt to the extremely low interest rate environment. He notes that the low-interest rate environment means that investors are turning to riskier assets, but they need to hedge some of that risk with gold.
Juan Carlos Artigas states that in terms of bullion performance relative to the other commodity market, other commodities have outperformed gold recently. He notes that in other inflationary cycles, gold caught on later and outpaced the recovery seen in other industrial commodities. Saying, “Let’s not forget the central banks,” Juan Carlos Artigas makes the following assessment:
Gold is a tried and tested tool for central banks and will continue to be a key component of their strategic assets. As time goes on, due to ongoing inflation problems, more investors and central banks will increase their holdings to gold.
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