“With all indicators pointing to inflation continuing to be problematic, the U.S. dollar index leveling off, and crude oil prices remaining high, gold prices could hit $2,000 an ounce this year,” emphasized Jim Wyckoff, Senior Market Analyst at Kitco News.
David Lin, Anchor at Kitco News discussed gold and inflation with Wyckoff.
Wyckoff explained that the reason there was a decoupling between gold and the Consumer Price Index last year was because it was perceived by the marketplace as an occurrence that was not going to be permanent. “The Fed called it transitory, and that’s just not the case. It’s proving not to be transitory. It is proving to stick around for a while longer,” Wyckoff said. “Future inflation reports are going to be watched by gold traders. And if they continue to be hot, that’s going to support upside gold price moves.”
Speaking more about inflation, Wyckoff said, “When central banks were infusing money into the financial system at the rate that they were for the past couple of years during the pandemic, that caused inflation down the road. That cash was going to start chasing assets and that’s what’s happening. We are seeing price inflation, and we have supply chain issues,” he continued. “That’s prompted some shortages. That created an end user that wants to stockpile even more supplies which only adds to price inflation.”
Gold has had a sizeable run up in the last two months. Wyckoff predicts the trajectory for gold is going to continue to be sideways to higher this year. “This could be a secular bull run. In my Kitco Annual Report on Gold, I forecast that gold was going to experience a good year in 2022, and that has started out to be the case,” he noted. “I believe that trend will continue. The next upside objective for the gold market is $1,850 an ounce. We already hit the November high of around $1,890. If those levels are taken out, that’s going to give the bulls more momentum to push prices even higher.”
Wyckoff also discussed what direction he sees Bitcoin headed. “The trend is that Bitcoin has been trading lower. The path of least resistance for prices is going to remain sideways to lower until there’s some technical development to suggest otherwise,” Wyckoff said.
For more on gold prices and inflation, please watch the full video above.
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