Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

2nd Quarter | 2022

Market insights and analysis

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Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

Last week, gold continued its consolidation, finding support at its 50-day and 200-day moving averages. The yellow metal closed the week at $1,807.80 per ounce.

Although the Federal Reserve has dropped its “transitory” description of U.S. inflation, it still seems reluctant to adequately address the magnitude of the problem.

Reuters reports, “Bank of America economists said on Friday that they expect the Federal Reserve to hike rates by 25 basis points seven times this year, beginning in March, adopting one of the most aggressive views on Fed tightening among major banks.

“Economists have scrambled to update rate hike expectations since the Fed on Wednesday said it was likely to hike interest rates in March and reaffirmed plans to end its bond purchases that month in what its chief Jerome Powell pledged will be a sustained battle to tame inflation.”

Although this new plan seems aggressive compared to past Fed efforts to reduce inflation, previous efforts were not implemented when the consumer price index was at 7.8%. Seven rates hikes of 25 basis points over the coming year only adds up to 1.75%—leaving a negative interest rate gap of more than 6%.

Investors looking to hedge against this inflation may want to consider fortifying their portfolios with gold while it remains at these support levels.

Rick Andrews is president of Avant Capital Management.



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