Geopolitical uncertainty continues to dominate the market mood, and gold prices managed to climb to an eight-month high of $1,900 in this new wave of fear and momentum. Experts’ opinions cryptocoin.com compiled for our readers.
Michael Hartnett says recession risks are rising
Despite gold’s 3% rally this week, the question remains: can the precious metal sustain this momentum if tensions between the US and Russia begin to subside? “As I mentioned earlier, this is one of the reasons why I am not a fan of buying gold as a safe-haven asset,” says market analyst Neils Christensen.
However, the analyst also states that it feels a little different this time as inflation remains a dark cloud hovering over the markets and harming the global economy. As central banks around the world react to rising consumer prices, many analysts are beginning to ring the warning bell that monetary tightening could plunge the global economy into recession.
Michael Hartnett, chief investment strategist at Bank of America, says in his latest note that recession risks are rising and he sees a scenario in the next six months that will turn shock forms into recession shocks.
“Gold prices will start to rise at this point”
“We are approaching the time when gold will shine,” says Neils Christensen, and states that at some point, markets will realize that their monetary policy expectations are too aggressive. We have already started to see that the expectation of an aggressive move is withdrawn in March. At the beginning of the week, markets saw a more than 50% chance of a 50 basis point increase, now they see a 30% chance of it happening. The analyst makes the following assessment:
From the minutes of the Fed’s January monetary policy meeting, we can see that it wants to raise interest rates ‘soon’. After all, they won’t sacrifice economic growth to rein in inflation. When the markets understand this fundamental truth, they will realize that real interest rates will remain extremely low and the real value of gold is starting to shine here.
According to many commodity analysts, a perfect storm is on the horizon as rising interest rates add volatility to stock markets, forcing investors to lower their risk profiles. But in a world where interest rates are still low, bond yields do not offer the protection they once did. John Reade, chief market strategist at the World Gold Council, notes that in this environment, gold can be an important diversification tool for any portfolio or investor.
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