In June, gold came close to revisiting its all-time high levels met in 2020 hovering at around $1,900 an ounce.
Since then, its price has stabilized, and some market analysts believe that this could be the resting phase before another launch upwards.
There are many factors supporting this belief, the main one being inflation.
ETF Trends CEO Tom Lydon told CNBC:
“Historically, when you look at inflationary times, gold tends to be a second-half player.”
With nearly $6 trillion in government aid from the US since the pandemic started, Americans are experiencing higher prices in food, gasoline, cars, and the housing market.
The upward continuous spiral of overpriced goods has had a significant impact on the economy in the past– and we’re seeing it take over the state of the economy today.
Inflation levels are expected to continue rising.
So much so that the International Monetary Fund sent out a warning: there’s a risk inflation will prove to be more than just transitory.
Just take a look at the housing market.
In a recent Fox Business article, Fannie Mae is predicting that because housing prices are rising, it could drive inflation up for the next year and a half, prompting inflation to hold at 5% by the end of the year and dropping to 3% by 2022.
It seems as if we are stuck between a battle of cause and effect, with no positive outcome for the American economy.
Fannie Mae’s forecast report highlights that:
“The downside risks associated with potentially persistently higher inflation, including a more aggressive pace of monetary tightening by the Federal Reserve, could drag on growth over the forecast horizon.”
The Federal Reserve has promised multiple times to refrain from rate hikes, but also increased its outlook on inflation and is projecting two rate hikes by the end of 2023.
Members of the FOMC are predicting it could be on the horizon.
And these rate hikes could come much sooner than 2023.
Inflation is moving faster and further than the Fed expected, which may cause them to take drastic measures.
Market analysts agree this could easily send gold soaring well past its all-time high.
Just last month, Bloomberg reported that the ratio of the S&P 500 to the price of gold is nearing its 2018 peak.
It’s well above its pre-crisis highs, and now Bloomberg sees the yellow metal on the verge of eclipsing 2018’s peak.
Call us at 800-462-0071 to learn how thousands of Americans are protecting their wealth against inflation with precious metals like gold.