An analysis carried out by MKS Pamp shows that gold prices could soar as high as £3,233 ($4,000) if the Federal Reserve rolls out a slow and steady series of rate hikes. Metals strategist Nicky Shiels says a slow cycle is strongly bullish for gold, with a look back at previous rate increases suggesting that the precious metal could easily beat its previous record high in the coming months and years.
Shiels said, “A slow Fed hiking cycle is very bullish gold (especially after 1year). Gold hardly falls below levels once the Fed starts on a slow hiking path (the max average drawdown is -2%). On average, 5years on its up 115%, which in today’s terms is equivalent to gold over £3,233 ($4,000) in 2027. Slow hiking cycle is one with incremental 25bp hikes, smaller total no. of hikes within the 1st year and/or relatively lower terminal funds rate.”
