Gold's Continued Rally Hinges on Fed Policy, U.S. Dollar.
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| Title: | Gold's Continued Rally Hinges on Fed Policy, U.S. Dollar. |
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| Authors: | CME Group |
| Source: | Benzinga. 02/02/2023. |
| Abstract: | The price of gold has risen by over $300 per ounce since hitting its recent low in November 2022. Even so, gold prices are only back to where they were last April. More broadly, gold prices have been range-bound since the summer of 2020. For the past two and a half years, gold has been unable to break past $2,080 to the upside; and even after its recent rally, it’s still about $140 short of that level (Figure 1). So, can the gold rally continue? Could the precious metal break through to new highs in 2023? In some ways, gold’s range-bound performance has been surprising. One might have believed that gold, touted as an inflation hedge, would have rallied as inflation surged. Instead, as inflation ramped up from 1.3% in 2020 to above 9% by mid-2022, gold prices went sideways. Even so, saying gold no longer serves as an inflation hedge might be imprudent. Between the spring of 2019 and the summer of 2020, gold prices rallied by nearly 60% as the Federal Reserve (Fed) began easing monetary policy, slowly at first, and then in grand fashion in March 2020 by cutting rates to zero and embarking on what would become a $4.9 trillion quantitative easing program. Rather than failing to be a hedge against inflation, it might be more accurate to say that investors in gold anticipated the high rates of inflation that came about in the two years after its rally ended. [ABSTRACT FROM PUBLISHER] |
| Database: | Newspaper Source Plus |
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| Abstract: | The price of gold has risen by over $300 per ounce since hitting its recent low in November 2022. Even so, gold prices are only back to where they were last April. More broadly, gold prices have been range-bound since the summer of 2020. For the past two and a half years, gold has been unable to break past $2,080 to the upside; and even after its recent rally, it’s still about $140 short of that level (Figure 1). So, can the gold rally continue? Could the precious metal break through to new highs in 2023? In some ways, gold’s range-bound performance has been surprising. One might have believed that gold, touted as an inflation hedge, would have rallied as inflation surged. Instead, as inflation ramped up from 1.3% in 2020 to above 9% by mid-2022, gold prices went sideways. Even so, saying gold no longer serves as an inflation hedge might be imprudent. Between the spring of 2019 and the summer of 2020, gold prices rallied by nearly 60% as the Federal Reserve (Fed) began easing monetary policy, slowly at first, and then in grand fashion in March 2020 by cutting rates to zero and embarking on what would become a $4.9 trillion quantitative easing program. Rather than failing to be a hedge against inflation, it might be more accurate to say that investors in gold anticipated the high rates of inflation that came about in the two years after its rally ended. [ABSTRACT FROM PUBLISHER] |
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