After an explosive start to the week, Gold prices have pulled on routine profit-taking as trader’s attention now shifts to the minutes of the Federal Reserve’s latest monetary policy meeting.
Earlier this month, the U.S Federal Reserve raised interest rates by 50-basis points – the biggest and most aggressive rate hike in 22 years against a backdrop of the largest war on European soil in almost 80-years and the fastest rise in inflation seen in over 41-years.
Since that pivotal policy meeting, Fed Chairman Jerome Powell has signalled increases of a similar magnitude – half a percentage point in June, July and possibly September – sending shockwaves through shockwaves through the global equity markets and heightening expectations of an economic slowdown.
Following this month’s rate hike, global equity markets slid into bear-market territory, with the S&P 500 plummeting 22%, whilst the Nasdaq fared even worse, tanking over 30% from recent highs.
Meanwhile, the most prominent sector benefitting from the current environment is Commodities.
As global equity markets fall deeper in bear-market territory, bullish sentiment across the commodities markets has continued to go from strength to strength – as they are typically viewed as one of the most safest and reliable hedges against economic risk, inflation and recession.
On that point, it comes as no surprise that a total of 27 Commodities ranging from the metals, energies to soft commodities have tallied up astronomical double to triple digit gains, already within the first 5 month of 2022.
And this is just the beginning!
Looking ahead, while Gold prices remains vulnerable to routine profit-taking in the near-term – it goes without saying – the fundamental backdrop for precious metal remains extremely bullish in the long-term.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
For a look at all of today’s economic events, check out our economic calendar.
Phil Carr is co-founder and the Head of Trading at The Gold & Silver Club, an international Commodities Trading, Research and Data-Intelligence firm.