Although negotiations between the parties have taken place, no steps have been taken for peace yet, and Russia’s invasion of Ukraine continues with all its violence, causing humanitarian crises. Gold prices touched $2,020 on Tuesday as rising geopolitical risks and inflation concerns pushed investors to seek refuge in safe havens. TD Securities strategists think gold still has a long way to go. Market comments and forecasts from famous strategists cryptocoin.com compiled for our readers.
Money managers increase their net long gold positions
Spot gold was trading at $2,006.60 at the time of writing, up 0.46% daily, after testing an 18-month high at $2,020.83 earlier in the day. U.S. gold futures rose 0.81% to $2,012.
The rise in commodity prices due to the Russia-Ukraine conflict and the resulting high inflation expectations prompted money managers to increase their net long gold risks. TDS strategists evaluate:
Money managers aggressively closed their short positions, as it became clear that the conflict in Europe was poised to drive inflation and that concerns about an economic slowdown would persuade the Fed and other key central banks to adopt a balanced approach to monetary policy.
“Yellow metal will stay strong until now”
While the yellow metal provides a successful hedge against inflationary pressures, it responds fairly quickly to geopolitical uncertainties and rising inflation. We can observe a good example of this very well lately. According to strategists, recent gains in gold are based on both an increase in inflation and its susceptibility to the geopolitical crisis. TDS strategists state that the yellow metal could reach the summer 2020 high of $2,075 and make the following inference:
With real 10-year rates falling to -0.97%, it wouldn’t be surprising if the gold price moved towards summer 2020 highs of $2,075. Until it becomes clear that the Fed will make a commitment to crush inflation, gold will likely remain strong. But this decision will likely not be taken quickly once it is known that the inflation trajectory is longer term.
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