The governors of the central banks will intervene in the conference of the European Central Bank (ECB) in Sintra. Nevertheless, gold is unlikely to break its recent rangeTD Securities strategists report.
Aggressive Fed regime collides with recession fears
“Central bank headlines will hit the markets today, with Fed Chairman Jerome Powell speaking on a panel at the ECB conference in Sintra, but gold markets will remain firmly in the recent range.”
“The yellow metal is being pulled in two directions as an aggressive Fed regime collides with recession fears. After all, a cycle of Fed hikes tends to be associated with heightened recession risks, as the US 5-30 year yield curve spread already points to a high probability of recession in the next twelve months. However, this hike cycle is different from recent historical analogs as the Fed’s ability to control inflation is limited as the supply side is disrupted.”
“Gold investors sniffing out a possible stagflationary outcome associated with lower growth but persistent inflation should consider that central banks, faced with a crisis of credibility, they could also keep raising rates for longer than they would.”
Source: Fx Street
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