Gold prices have fluctuated between $1,700 and $2,000 over the last eighteen months. Many of us have been less than impressed with the yellow metals’ inability to find footing and price stability during what should have been a stellar period to own gold. Given gold’s history as a haven asset during times of war, financial turbulence, quantitative easing, etc.
But a significant price move may be over the horizon as the Federal Reserve may signal an end to interest rate hikes.
Historically, many investors have purchased gold to offset losses caused by inflation. But interest rate hikes and the newfound strength of the U.S. dollar have recently subdued the price of gold. However, the worsening global economic outlook and growing fears of a recession offer some support to the safe haven of gold.
Alasdair Macleod of Goldmoney.com writes, ‘we are now seeing the initial stages of a currency, credit, and banking crisis develop.’
Weekly jobless claims from July 15th and the Philly Fed Manufacturing Index – also point to signs of a deteriorating economic direction.
Suppose the past is any indicator of the future. In that case, the Fed will undoubtedly have difficulty landing this fragile U.S. economy in a good place. As interest rate hikes come to an end, look for the price of gold to increase.