Gold continues its slide as global economy stalls
Hemke says gold will regain safe-haven bid as stocks fall – $2100 by year-end

(USAGOLD – 5/13/2022) – Gold continued its slide this morning as investors weighed the effects of Fed policy, the lockdowns in China and a stalled global economy. It is down $7.50 at $1820. Silver is up 5¢ at $20.81. On the year thus far, silver is down 9.4%, falling in line with a sharp drop in industrial metals across the boards. Gold is down just under 1%. Those declines, though, are not nearly as steep as what has occurred in the stock and bond markets – down 17% and 18.5% respectively so far this year. TF Metals Report’s Craig Hemke sees gold as simply giving up unexpected, war-related gains and still on track for a strong showing in 2022.

“No one could have fully predicted the Russian war on Ukraine and the international reaction,” he writes in a report posted at Sprott Money earlier this week. “The events of February and March led to a price spike in COMEX gold that reached all the way to $2060, but now the price is fully $200 lower and back to where we figured it would be through the first third of the year. What happens next? COMEX gold will soon make another ‘higher low’.…From there, it will begin to benefit from a ‘safe haven bid’ as the S&P falls. It will also begin to anticipate the inevitable Powell Pivot II, and all of this will play out over the summer. And then, just as written in January, it will challenge that $2100 level again in the final third of the year.” 

(Editor’s note: The chart below shows the results of the first Powell Pivot in 2019.)

QE/QT/QE cycle 2016-2022
overlay line chart showing gold and the Fed balance sheet growth 2016 to present
Chart courtesy of Trading View.com/Annotations by USAGOLD/Click to enlarge

 

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