Despite Ultra-Hawkish Fed’s Meeting, Gold Jumps
The FOMC finally raised interest rates and signaled six more hikes this year. Despite the very hawkish dot plot, gold went up in initial reaction. There has been no breakthrough in Ukraine. Russian invasion has largely stalled on almost all fronts, so the troops are focusing on attacking civilian infrastructure. However, according to some reports, there is a slow but gradual advance in the south. Hence, although Russia is not likely to conquer Kyiv, not saying anything about Western Ukraine, it may take some southern territory under control, connecting Crimea with Donbas. The negotiations are ongoing, but it will be a long time before any agreement is reached.
Currency Trading VS Stock Trading
The currency trading market differs from the stock market in many areas. When stocks begin to plummet panic ensues. People get nervous about their stock holdings and want to close their positions quickly. When forex trading currency prices begin to plummet golden opportunities arise. The currency that is plummeting means the currency that is paired with it is rising quickly. Traders who have these positions will jump for joy as other potential investors begin flocking to these rising opportunities.
Russian Bear Roars. Will It Awake Gold Bulls?
The current military tensions and the Fed’s sluggishness favor gold bulls, but not all events are positive for the yellow metal. What should we be aware of?. It may be quiet on the Western Front, but quite the opposite on the Eastern Front. Russia has accumulated well over 100,000 soldiers on the border with Ukraine and makes provocations practically every day, striving for war more and more clearly. Last week, shelling was reported on Ukraine’s front line and Russia carried out several false flag operations. According to Linda Thomas-Greenfield, the U.S. Ambassador to the United Nations, “the evidence on the ground is that Russia is moving toward an imminent invasion.”
Inflation Peak – High Risk or Opportunity for Gold?
Not only won’t inflation end soon, it’s likely to remain high. Whether gold will be able to take advantage of it will depend, among others, on the Fed. Do you sometimes ask yourself when this will all end? I don’t mean the universe, nor our lives, nor even this year (c’mon, guys, it has just started!). I mean, of course, inflation. If only you weren’t in a coma last year, you would have probably noticed that prices had been surging recently. For instance, America finished the year with a shockingCPI annual rateof 7.1%, the highest since June 1982, as the chart below shows.
Is It Worth Adding Gold to Your Portfolio in 2022?
Gold prices declined in 2021 and the prospects for 2022 are not impressive as well. However, the yellow metal’s strategic relevance remains high. Last month, the World Gold Council published two interesting reports about gold. The first one is the latest edition of Gold Demand Trends, which summarizes the entire last year. Gold supply decreased 1%, while gold demandrose 10% in 2021. Despite these trends, the price of gold declined by around 4%, which – for me – undermines the validity of the data presented by the WGC.
Fat or Flat: Gold Price in 2022
Analysts' 2022 forecasts for the gold market are not overwhelmingly enthusiastic – they see it flat. However, maybe the opposite should be expected. The LBMA has recently published its annual precious metals forecast survey. In general, the report is neutral about gold in 2022. On average, the analysts forecast gold prices to be broadly flat this year compared to the year. The average gold price in 2021 was $1,799, and it is expected to rise merely $3 to $1,802. How boring! However, as the table below shows, the forecasts for other precious metals are much more bearish, especially for palladium.
The ECB Awakens. Will Gold Feel the Force?
Lagarde opened the door to an interest rate hike, which gave the European Central Bank a hawkish demeanor. Does it also imply more bullish gold?. TheECBhas awoken from its ultra-dovish lethargy. In December 2021, the central bank of the Eurozone announced that its Pandemic Emergency Purchase Program would end in March 2022. Although this won’t also mean the end of quantitative easing as the ECB continues to buy assets under the APP program, the central bank will be scaling down the pace of purchases this year. Christine Lagarde, the ECB’s President, admitted it during her press conference held last week. She said: “We will stop the Pandemic Emergency Programme net asset purchases in March and then we will look at the net asset purchases under the APP.”
Even Strong Payrolls Couldn’t Knock Gold off Its $1800 Perch
The latest employment report strongly supports the Fed’s hawkish narrative. Surprisingly, gold has shown remarkable resilience against it so far. What a surprise! The US labor marketadded 467,000 jobs last month. As the chart below shows, the number is below December’s figure (+510,000) but much above market expectations – MarketWatch’s analysts forecasted only 150,000 added jobs. Thus, the report reinforces the optimistic view of the US economy’s strength, especially given that the surprisingly good nonfarm payrolls came despite the disruption to consumer-facing businesses from the spread of the Omicron variant of the coronavirus.
Gold Ended January Glued to $1,800. Will It Ever Detach?
Gold didn’t shine in January. The struggle could continue, although the more distant future looks more optimistic for the yellow metal. That was quick! January has already ended. Welcome to February! I hope that this year has started well for you. For gold, the first month of 2022 wasn’t particularly good. As the chart below shows, the yellow metal lost about $11 of its value, or less than 1%, during January.
Gold Defended $1,800 Bravely, but Gave Up
Gold fought valiantly, gold fought nobly, gold fought honorably. Despite all this sacrifice, it lost the battle. How will it handle the next clashes?. Have you ever felt trapped in the tyranny of the status quo? Have you ever felt constrained by some invisible yet powerful forces trying to thwart the fullest realization of your potential? I guess this is what gold would feel like right now – if metals could feel anything, of course.
Gold Plunged but Didn’t Knuckle Under to the Hawkish Fed
The FOMC set the stage for a March interest rate hike, which was an aggressive signal. Gold got it and fell – but hasn't capitulated yet. The Battlecruiser Hawk is moving full steam ahead! The FOMC issued yesterday (January 26, 2022) its newest statementon monetary policy in which it strengthened its hawkish stance. First of all, theFedadmitted that it would start hikinginterest rates“soon”:
Will 2022 Be the Groundhog Year for Gold?
The World Gold Council believes that gold may face similar dynamics in 2022 to those of last year. Well, I’m not so sure about it. Have you ever had the feeling that all of this has already happened and you are in a time loop, repeating Groundhog Day? I have. For instance, I’m pretty sure that I have already written the Fundamental Gold Report with a reference to pop-culture before…
Russian Bear and Inflationary Hydra Sent Gold to $1,840
Gold soared as investors got scared by reports of an allegedly impending military conflict. Was it worth reacting sharply to geopolitical factors?. Gold has been performing quite nicely in January. As the chart below shows, its price increased from $1,806 at the end of December to around $1,820 this week, strengthening its position above $1,800.
Neither Inflation nor the Fed Moves Gold
Inflation spiked 7.1% in December, and the Fed is likely to raise interest rates already in March. Still, gold remains uninterested. “Inflation is too high,” admitted Lael Brainard during her nomination hearing in the Senate for the Vice Chair of the Fed. You don’t say, Governor Obvious! Indeed, the latest BLS report on inflation shows that consumer inflation rose 0.5% in December on a monthly basis, after rising 0.8% in the preceding month. The core CPI rate increased 0.6%, following a 0.6-percent increase in November.
Powell Sends a Smile to Gold
Powell testified before the Senate. He didn’t say anything new, but gold rallied a bit. “We have totally screwed up inflation and now we are in deep trouble,” admitted Jerome Powell during his appearance before the Senate. OK, he didn’t formulate it exactly that way, but it was the message of his testimony. Powell admitted that theFedwrongly expected a faster easing of supply disruptions and thought that price pressures would be much lower by now. As a consequence, inflation was believed to be only ‘transitory’. Unfortunately, that’s not what happened.
Weak Payrolls Saved Gold. For How Long?
Job creation disappointed in December. However, it could not be enough to counterweight rising real interest rates and save gold. On Thursday (January 6, 2022), I wrote that “the metal may find itself under hawk fire in the upcoming weeks”. Indeed,gold dropped sharply in the aftermath of the publication of theFOMC minutes. As the chart below shows, the hawkish Fed’s signal sent the price of the yellow metal from $1,826 to $1,789.
Value of U.S. Dollar Falls After Jobs Report
On the heels of a jobs report issued in December that failed to meet expectations, the U.S. dollar was valued lower in comparison to a conglomerate of major currencies on Friday. The index weakened after it was announced by the Labor Department that nonfarm payrolls increased by 199,000 last month, more than 50% short of the original estimate.
Bang and Plunge: 2022 Replays 2021 for Gold
The start of 2021 wasn’t successful for gold: after a few days of rally, the yellow metal entered a bearish trend. 2022 looks uncomfortably similar. So far, so good – the first three days of 2022 didn’t bring a new catastrophe. It’s probably just the calm before the storm, but the new year started well. Even the price of gold has risen! As the chart below shows, the yellow metal managed to jump above the key level of $1,800 at the very end of 2021, but it still maintains its position (at least as of early January 3, 2022).
2022 – The Year of (Gold) Inflation?
High inflation won’t go away in 2022. Good for gold. However, it is likely to continue to climb and reach its peak. That sounds a bit worse for gold. If 2021 was tough for you, I don’t recommend reading Nostradamus’ predictions for the next year. This famous French astrologer saw inflation, hunger, and much more coming in 2022: