Gold bulls should focus on long-term protection, not short-term opportunity costs - State Street's George Milling Stanley StateStreet GeorgeMillingStanley gold
- Gold prices have fallen to a four-month low as Federal Reserve Chair Jerome Powell has struck a hawkish tone during his two-day semiannual testimony before Congress. However, looking at the broader landscape, one market strategist said that despite the difficult headwinds, gold continues to show relative strength as U.S. monetary policy is only one small aspect driving the gold market.
Instead of looking at short-term opportunity costs of holding gold in a rising interest rate environment, Milling-Stanley said that investors should look at how gold can provide long-term protection and enhanced risk-adjusted returns. While gold could continue to struggle in the near term as the Federal Reserve maintains its aggressive monetary policy, George Milling-Stanley said that investors should also consider the impact this will have on equity markets and the growing inflation threat.
Along with rising equity market volatility, Milling-Stanley said that he does not expect the Federal Reserve's slower pace of rate hikes to provide much new momentum to the U.S. dollar, which could give some support to gold. He noted that only in October gold prices were testing long-term support at $1,680 an ounce. Despite its recent correction, gold prices are up 14.5% from the 2022 lows.
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