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Investing.com – With most markets heading towards the assumption that gold will fall sharply from the squeeze, Luke Alexander, CEO of gold miner Newcore Gold Ltd (TSXV 🙂 disagrees with the expectations and said, “The Fed rate hike has led to downward pressure on the price of gold, but eventually gold will explode.”
The price of gold fell 8.6% over the year, although US inflation peaked at 9.1% in June.
A big burden for gold .. but
Alexander said that as the Fed hikes interest rates, the US dollar will continue to do well, which will be “a huge burden on gold”. She added: “When the outlook starts to change, I think that is when we will start to see a strong performance of gold, and it could be a very aggressive move to the upside.”
He also said: “Gold is undervalued, and that’s in terms of the momentum I’ll see over the next six months, in terms of inflation starting to go down, as well as some of the tensions we’re still seeing around the world that, like we all know, gold is active and increases disasters, which makes the rise of gold inevitable.
expectations of interest
Goldman Sachs (NYSE 🙂 raised the Federal Reserve’s funding rate forecast by 75 basis points from the previous two weeks, bringing it to a final interest rate of between 4% and 4.25% by the end of the year. 2022.
“The trajectory of higher interest rates, combined with the recent tightening of financial conditions, points to a slightly worse outlook for growth and jobs for the next year,” the bank’s analysts said.
They added: “Our growth forecast is just below the agreed level and indicates a lower-than-expected growth trajectory that we believe is necessary to cool wage and price inflation.”
Although gold is a safe haven currency to protect against economic problems and inflation, rising interest rates increase the opportunity cost of holding gold as investors increase their holdings of dollars at the expense of non-productive gold.
gold now
It has now dropped, near its lowest level in more than two months, to 1,670 levels per ounce, with losses of $ 14 per ounce, or 0.8%.
By contrast, the US dollar lost nearly $ 15 an ounce, dropping to levels close to $ 1659.7 an ounce.
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