Will Stagflation Lead To Higher Gold Prices In 2022?
That is starting to raise fears of “Stagflation” – a period of high inflation accompanied by a slowdown in economic growth.
Early signs of Stagflation are beginning to emerge.
Your capital is at risk
On Tuesday, the New Yorker Federal Reserve reported a negative turn in its manufacturing activity for first time in 20 months.
The New York Empire State Manufacturing Index nosedived to -0.7 points in January from a reading of 31.9 in December. The data indicates that growth is beginning to stall after a period of significant expansion.
Stagflation presents a major problem for policymakers at the Fed and around the rest of the world. There are few tools to combat both inflation and a slowdown at the same time. The strongest fix for an economic slump is to lower interest rates, but those have been at near zero for almost two years.
The other option is to raise interest rates as the Fed and other central banks have signalled they may soon do. However, tightens too much too quickly makes the risk of a recession almost unavoidable.
For traders, all of this means one thing: Gold prices this year will be driven by inflation and the risk that policymakers will call the post-COVID recovery wrong.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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