Gold price has a path to $2,200 after Fed revealed its strategy

3.21.22 - Housing: Predicting the Next Recession

Gold last traded at $1,934 an ounce. Silver at $25.20 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying despite a firmer dollar. U.S. stocks retreated following a Russian warning to the U.S. that relations are 'on the verge of rupture.'

KITCO--"The Federal Reserve has laid out a clear tightening path, and now gold prices are free to push to new highs above $2,000 an ounce as inflation will remain a clear threat to consumers, according to one market strategist.

In a telephone interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said Wednesday's monetary policy decision was slightly more hawkish than he expected; however, he added that it was a lot more dovish than market outlook.

As expected, the Federal Reserve raised interest rates by 25 basis points. At the same time, it signaled that it could start reducing its balance sheet at the next meeting. The central bank also updated its economic projections, lowered its growth forecast and raised its inflation expectations for 2022. Finally, the central bank also sees the potential for seven rate hikes this year.

While this might sound hawkish, Milling-Stanley said it wouldn't be enough to frighten the gold market.

'If indeed the Federal Reserve does follow through with its plan that will put interest rates at 1.75% by the end of the year,' he said. 'Interest rates will remain under 2% this year. I don't think markets have much to worry about.'....

'With CPI at 7.9%, [Federal Reserve Chair Jerome] Powell had to do something. But he will remain cautious when it comes to fulfilling his dual mandate,' he said. 'The Federal Reserve can only move gradually.'....

Along with the growing inflation threat, Milling-Stanley said that falling global growth forecasts due to Russia's invasion of Ukraine will continue to support speculative investment demand for gold."