Investors want to hold on to their gold as the pain from rate hikes is coming - SSGA's George Milling-Stanley

9.23.22 - Investors Will Want to Hold Their Gold

Gold last traded at $1,643 an ounce. Silver at $18.84 an ounce.

NEWS SUMMARY: Precious metal prices traded lower Friday pressured by rising rates and a firmer dollar. U.S. stocks tumbled as investors fear the Fed's aggressive hiking campaign to fight inflation will lead to an economic downturn.

Kitco--"Now is not the time to liquidate your core gold positions as the Fed has been clear that economic pain will be coming, according to one gold market strategist.

In an interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that gold prices could continue to struggle as three components of the U.S. economy show resilient strength even as the Federal Reserve maintains its aggressive monetary policy stance....

'Equity markets have been rallying on cheap money since 2008 and free money since 2018, and they are down, but they have further to go if Powell wants to get inflation back to 2%,' he said. 'Powell will keep raising rates until the stock market comes down further. It could take a few months before investors start to feel the real pain of higher interest rates.'

Although investment demand has been lackluster through most of 2022, Milling-Stanley said that the impending economic slowdown from rising interest rates is the reason why investors should hold on to their core gold holdings.

'Inflation is still worryingly high, and Powell has made it very clear that he is going to have to cause some pain to the economy to bring it down,' he said. 'We face a lot of macroeconomic and geopolitical uncertainty and in this environment, I certainly would not be selling my safe-haven assets. At these prices, I would be looking to add to my core position, which is something I think we are seeing.'"