Crypto Currencies Edging Out Gold as Inflation Hedge
Sector Summary2 hours ago by MT Newswires
11:14 AM EST, 11/18/2021 (MT Newswires) -- Credit Suisse on Thursday lowered its 2022 price forecast for gold as the metal's price disconnects from the dollar and bond yields as investors turn to cryptocurrencies to hedge against inflation.
"We have seen recent strength in the gold price, following the U.S. Fed's patient stance on raising interest rates (first rate hike likely in H2/22), coupled with elevated inflation," the investment bank said in a note.
"The 10Y U.S. TIPS yield (i.e. real rate) remains deeply negative at -1.10% at the time of this writing. The record low was -1.19% in August 2021. Q4 to date, gold price has increased ~6% from ~$1,760/oz to ~$1,863/oz at the time of this writing.
We also find over the past year, there have been instances of significant positive price movement for Bitcoin and on those days, gold typically trades lower or lags, though the overall correlation is positive.
Given the prevailing macro factors (i.e. low rates, high inflation), we would have expected gold to be trading higher were it not for cryptocurrencies serving a similar inflation-hedge function for some investors.
Based on our two-factor model - TIPS yield and USD index - the implied gold price is ~$1,910/oz vs. ~$1,863/oz spot ... Given the recent disconnect between real rates and the gold price, we moderate our 2022 gold price forecast.
We now expect gold prices to average $1,850/oz in 2022 vs. $1,900/oz previously."
Sector Summary2 hours ago by MT Newswires
11:14 AM EST, 11/18/2021 (MT Newswires) -- Credit Suisse on Thursday lowered its 2022 price forecast for gold as the metal's price disconnects from the dollar and bond yields as investors turn to cryptocurrencies to hedge against inflation.
"We have seen recent strength in the gold price, following the U.S. Fed's patient stance on raising interest rates (first rate hike likely in H2/22), coupled with elevated inflation," the investment bank said in a note. "The 10Y U.S. TIPS yield (i.e. real rate) remains deeply negative at -1.10% at the time of this writing. The record low was -1.19% in August 2021. Q4 to date, gold price has increased ~6% from ~$1,760/oz to ~$1,863/oz at the time of this writing. We also find over the past year, there have been instances of significant positive price movement for Bitcoin and on those days, gold typically trades lower or lags, though the overall correlation is positive. Given the prevailing macro factors (i.e. low rates, high inflation), we would have expected gold to be trading higher were it not for cryptocurrencies serving a similar inflation-hedge function for some investors. Based on our two-factor model - TIPS yield and USD index - the implied gold price is ~$1,910/oz vs. ~$1,863/oz spot ... Given the recent disconnect between real rates and the gold price, we moderate our 2022 gold price forecast. We now expect gold prices to average $1,850/oz in 2022 vs. $1,900/oz previously."