Why don’t some economists see gold as a safe-haven?

The aggressive stance adopted by the US Federal Reserve and the anticipated rate hike in November’s FOMC meeting amid high inflation constitute some of the factors that do impact gold prices according to most economists and strategists.

Investors are unlikely to grow their appetite for gold. There is a flat and inverted yield curve that has historically been associated with a slowing growth outlook and concurrently rising gold prices.

This cycle, however, inflation’s increasing persistence is a constraint for the Fed, which suggests that a restrictive rates regime may persist for longer than historical precedents.

In this context, gold prices are unlikely to rise with a deteriorating growth outlook until the Fed makes progress in the war on inflation.

US wage growth trends are validating near-term household inflation expectations, but appear to have settled at levels that would sustain a CPI inflation rate of 5%-6% going forward, far removed from the 2.5% rate consistent with the Fed’s inflation target.