Inflation got out of control, and now the US Federal Reserve System is forced to somehow react to it, the expert said. But tightening monetary policy does not mean the price of gold will fall, he said.
“Traditionally, gold has been a defensive asset against inflation. There is a misconception that raising interest rates will affect the value of gold because people are supposedly borrowing money to buy gold, which is completely false, ”said a mining expert. "Most people use gold as a way to store and preserve their capital."
“There is only one reason the price of gold will decline: if central banks slow down inflation, which they did until recently,” explains Ecclestone. “But inflation continues to rise, especially in the US and UK, where it has gotten out of hand. Only an increase in interest rates can curb inflation. "
As for inflation and its impact on the economy, Ecclestone said that investors who are confident that the Fed can control inflation are wrong. “The inflationary beast has burst out, and it will take a lot of effort to return it back to its cage,” the expert believes. “This will ultimately affect the real estate markets. This will have an impact on heavily indebted companies. We are already seeing major bankruptcies in the real estate market in China, linked to over-indebtedness by construction companies. "
He said he expects a significant rise in gold prices in the next 2022. A level above $ 2,000 per ounce is quite possible, he said. In the next five years, the yellow precious metal may approach the $ 3000 mark.
Analysts of the American bank JP Morgan adhere to a different opinion. They remain bearish on precious metals. A rebound in US nominal yields is likely to weigh on the gold price over the medium term, the bank's analysts said in a recent review. According to their forecast, in the next 2022 the price of gold will average $ 1,630 per ounce, and the average price of silver will be $ 20.48 per ounce.