With all eyes and ears tuned to Jackson Hole ahead of Federal Reserve chairman Jerome Powell’s keynote address, one investment expert says that even a more hawkish tone won’t stifle the gold bulls.
Invesco chief investment strategist Kristina Hooper says that the most likely outcome from the annual gathering is that the Feds will adopt an extremely hawkish tone, with inflation still running at elevated levels and more rate hikes already confirmed.
She said, “The Federal Reserve has been successful in managing inflation expectations, so there is no reason to change the formula now. We’re going to hear very, very hawkish rhetoric.”
However, this may not tell the whole story, she adds, pointing out that the next planned meeting of the Federal Reserve is some way off, leaving plenty of room for the approach to change based on what’s happening in the economy. “The next meeting is a lifetime away. We will get a lot of data between now and then, and it’s clear that the Fed is already impacting aggregate demand.
“Right now, the Fed is focused on inflation, but there are long-term issues that they will eventually have to address. The government clearly has challenges with high levels of debt, but that’s going to be a long-term problem. The immediate issue is inflation.”
While some reports have suggested that inflation may have peaked, there isn’t yet enough data to confirm that theory, meaning the unusually high rate hike planned for September will almost certainly go ahead. However, the extent of the unknown and degree of geopolitical unrest makes an even stronger case to buy gold, with Hooper explaining, “Inflation remains high; the U.S. economy continues to slow, and Russia’s war with Ukraine is not ending anytime soon. There is so much uncertainty out there that holding some gold makes sense. Most investors do not have enough exposure to alternative assets in their portfolios. And gold is a unique alternative.”
With all eyes on Wyoming, gold continues to trade steadily around the £1,488 ($1,760) mark. This price point represents an excellent opportunity for investors to jump in ahead of a move to the upside anticipated later this year. Don’t miss your chance to capitalise.
