According to a market strategist, even though the Fed is trying to tighten monetary policy this year, there is still a way back to $2,000 an ounce for the price of gold. cryptocoin.com We convey the details as…
Milling-Stanley: Gold price will hit $2,000 threshold
In a podcast he attended, George Milling-Stanley, chief market strategist at State Streat Global Advisors, said that although the Fed is looking to raise rates with the potential for three or four rate hikes this year, it means higher inflation pressure. The yield will remain in negative territory, he said. Milling-Stanley reflected on what is driving the gold market, with prices holding a two-month high at around $1,840 an ounce. The expert used the following expressions:
If we raise four rates in 2022, interest rates will be 1 percent. This is nothing to be afraid of. Paul Volcker (former Fed Chairman) pushed interest rates much higher in the 1980s, when inflation was much higher.
Milling-Stanley pointed out that, looking back to the 1970s, when the economy saw sustained inflation levels above 5 percent, the nominal return on gold prices was about 15 percent and the real return on it was about 10 percent. In December, the Consumer Price Index rose 7 percent year-on-year. Economists and analysts say rising commodity prices and wages could keep inflation above 5 percent for most of 2022.
“If that happens, the price of gold will come very, very quickly to the threshold of $2,000,” Milling-Stanley said. He pointed out that these levels are likely to be seen this year. According to Milling-Stanley, gold is not only an important hedge against rising consumer prices, but can also offer some protection when stock markets begin to weaken and volatility increases.
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