The gold market has been rational for the past three years, making it easier for investors to analyze it, according to investment bank Liberum.
It was a very aggressive and simultaneous push by countries into industrial commodities."And gold got swept up in that because people who invested in gold recognized the inflation shock that was coming," Price explained. However, this did not last, with the Fed returning as the dominant gold price driver. This view solidified after Fed Chair Jerome Powell warned of the possibility of higher and quicker rate hikes due to robust economic data and uncomfortably high inflation."Now everyone is coming to terms with the fact that the U.S. economy is doing very well and the Fed's going after inflation," Price described."To me, that all makes sense.
This means there is a massive amount of capital on the sidelines waiting to come back into the market, according to Price."It's been steadily withdrawn during 2022. And now people want to get back in and make a profit in these markets. But the Fed's not letting them, not for a while, anyway," he said.