Gold Extends Losses in Asia After Hawkish Powell Spurs Plunge

Posted By TheNewsCommenter: From News.yahoo.com: “Gold Extends Losses in Asia After Hawkish Powell Spurs Plunge”. Below is an excerpt from the article.

(Bloomberg) -- Gold extended losses -- after falling the most in two months -- as a more hawkish-than-expected Federal Reserve underscored the central bank’s aggressive approach to tackling inflation.

Bullion edged lower on Thursday after plunging 1.5% in the previous session as Fed Chair Jerome Powell didn’t rule out raising interest rates at every meeting to rein in the quickest inflation in a generation. Markets have ramped up pricing of Fed hikes, pointing to a 94% probability of five quarter percentage-point moves in 2022.

The tumble wiped out gold’s gains so far this year that were driven by investor bets for a continuation in negative real rates even with rate hikes expected. The hawkish pivot has challenged that narrative, although bullion may still do well as a hedge against inflation and rising geopolitical risks including a potential Russian invasion of Ukraine.

Goldman Sachs Group Inc. raised its 12-month outlook for gold to $2,150 an ounce from $2,000 following Powell’s comments on expectations for slower U.S. growth, a rebound in emerging markets excluding China and faster inflation.

“This combination of slower growth and higher inflation should generate investment demand for gold, which we consider to be a defensive inflation hedge,” analysts including Mikhail Sprogis said in a note on Thursday.

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