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Standard Chartered says it fully expects a resurge in gold prices in the wake of the Federal Reserve’s comments around tapering. The bank’s precious metals analyst, Suki Cooper believes that prices were in a holding pattern awaiting the timeline clarification from Chairman Powell, and now that that is in place, all signs indicate that gold will break out as we head in to 2022.

Cooper said, “Gold positioning was relatively cautious ahead of the meeting and price action suggested that a number of headwinds were already priced in. Gold had possibly priced in the likelihood of accelerated tapering given its sensitivity to high inflation prints. Gold prices tend to start firming after the first rate hike in a hiking cycle or tapering announcements as, historically, the market prices in such move early. The Fed accelerated tapering to USD 30bn per month starting in mid-January and raised inflation forecasts; the FOMC’s dot plot now shows three hikes in each of 2022 and 2023 and two more in 2024. Gold has shifted lately to tracking real yields more closely than the USD… Prices are likely to attempt another breach of £1,353 ($1,800) next year as the USD is likely to weaken and real yields remain negative.”

Standard Chartered forecasts that gold will trade around £1,410 ($1,875) as early as quarter one. Don’t hesitate. Buy gold now.

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