Wait Until Q1 2022 For Gold!

Recent gold sales could be a buying opportunity ahead of the Q1 rally, according to the Standard Chartered analyst. According to Suki Cooper, the bank’s precious metals analyst, the recent price drop in the gold market could be a buying opportunity as the Federal Reserve is still expected to be in no hurry to raise interest rates no matter who is sitting at the desk. For details cryptocoin.comDo not leave .

Pre-2022 scenarios for gold

Standard Chartered Bank’s precious metals analyst Suki Cooper said in a report released Friday that he saw a rise in gold prices through the first quarter of 2022 as the market continues to focus on increasing inflation pressures and lower real bond yields. Cooper says:

From the strengthening of the US dollar to the Fed’s contraction schedule, we believe many of the headwinds for gold are priced in and prices remain good. While these headwinds may re-emerge, downside risks to growth, plus our high inflation expectations. The USD weakening and real yields remain deeply negative, suggesting that price drops are likely to be seen as good buying opportunities.

Standard Chartered projects first-quarter gold prices to average around $1,875 an ounce, representing a 3% gain from Monday’s price. The market for gold fell sharply below critical support at $1,835 an ounce after President Joe Biden announced he would nominate Jerome Powell to remain Chairman of the Federal Reserve. Gold prices fell on Monday as the US dollar hit a new high of the year. December gold futures were last traded at $1,816.60, down nearly 2% on the day. As gold reacts to the strength of the US dollar, Cooper said the correlation is starting to deteriorate. It might be better to watch gold’s relationship to real returns, he added.

The analyst’s views on the gold-dollar relationship are as follows:

Gold followed the USD most closely for most of the year, with the quarterly rolling correlation exceeding 70% in some months. While the relationship has remained strong, it has weakened towards 30% in the last two weeks. The three-month rolling correlation with real rates strengthened and reached 50% again. As a move, the realignment of this relationship bodes well for gold prices.

The relationship of gold with inflation

He added that gold is responding to the threat of rising inflation. He noted that with the release of the Personal Consumption Expenditures Index, markets will receive another critical inflation report this week. He said Standard Chartered expects PCE to rise 4.2% for the year, the highest since 1991. “The gold market is concerned about the risk of high inflation, but at the same time does not believe that central banks will immediately react hawkish to the pressures of high inflation,” Cooper said. Cooper also noted that the market began to stabilize after the dismal interest from investors in gold. The flows are on track to mark the biggest annual outflow since 2013, he said: “Net redemptions have been a significant market challenge this year and gold prices are likely to gain upward momentum if they stabilize.”

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