In an interview with Kitco News, Ronald-Peter Stoferle, managing partner and fund manager at Incrementum AG and one of the authors of the annual In Gold We Trust report, stated that he expects gold prices to fall in the near future as the markets begin to price in additional aggressive monetary policy action from the Federal Reserve.
The markets have priced in a 21% possibility that the Federal Reserve would raise interest rates by 50 basis points next month due to persistently rising inflation. As a result, the yield on US two-year notes has surpassed 4.6%, its highest level since 2007.
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“This is a tough environment for gold, and I expect to see further downside risks in the next couple of weeks,” said Ronald-Peter Stoferle.
Meanwhile, in a research report released at the end of last month, the Montreal-based research firm BCA Research stated that it was upgrading its year-end gold price prediction to $2,000 per ounce due to the emergence of wartime economies in the West and the escalating risk of ‘fiscal supremacy’.
China-Russia-USA conflict worsens
The United States fired down a suspected Chinese spy balloon two weeks ago. This resulted in diplomatic ties between the United States and China degrading further.
Moreover, the United States fueled worries that the situation in Ukraine might continue to intensify. China contemplated providing “lethal support” to Moscow.
Fed’s minutes are due later today
In related news, the United States Federal Reserve will release the minutes of its first policy meeting of the year during the late American session. In addition, market participants will closely follow central bank officials’ remarks.
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The likely pivot/impasse in the Fed’s normalization process narrative is anticipated to remain at the center of the debate, along with the hawkish message from Fed speakers, after US inflation data for January revealed that consumer prices are still excessive, the labor market stays tough, and the economy preserves its strength.
Gold remains in a short-term downtrend channel, but the overall long-term bull market is expected to continue when the price jumps above the upper trend line of the mentioned channel, currently near $1,855 – $1,860.
Gold futures 1D chart, source: tradingview.com, author’s analysis