- Gold prices remain under pressure, but its ability to hold critical support levels reveals that investors could be worried that hawkish monetary policies worldwide have run their course, even as inflation remains stubbornly high.
Last month, during the Federal Reserve's central bank symposium at Jackson Hole, Wyoming, ECB President Christine Lagarde said that the world could be seeing the start of a new economic era. Schieven added that it is difficult to see how inflation falls as commodity markets continue to see broad supply constraints, keeping food and basic material prices elevated. The oil market is seen as a prime example as OPEC+ supply cuts continue to support prices near their highest levels in a near.
Schieven said that this environment supports gold as higher inflation will keep real bond yields and the U.S. dollar in check. Schieven said the labor market will be the key to the Federal Reserve's monetary policy. Although the U.S. labor market has been relatively resilient, there are signs of cooling.