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(Kitco News) - Once again, the gold market is fighting for relevancy within financial markets as investors react to more hawkish rhetoric from Federal Reserve Chair Jerome Powell.

Just three weeks ago, gold was in a bullish uptrend as investors looked to protect themselves from rising inflation pressures. Now the Federal Reserve appears to be taking the threat seriously, and expectations are rising that the central bank will be more aggressive in tightening its monetary policy. Markets expect that the Fed will reduce its monthly bond purchases at a faster pace in December. Markets are also starting to price in four rate hikes in 2022.

However, even as interest rate expectations begin to shift, the broader investment landscape remains the same. Despite Powell's new hawkish stance, most economists and market analysts expect the Federal Reserve to remain well behind the inflation curve. This means that the real interest rate will remain in negative territory, a strong environment for the gold price.

While gold remains stuck in neutral in the near term as investors adjust to the Federal Reserve's monetary policy shift, funds continue to see long-term potential in precious metals. This week, Kitco's Anna Golubova interviewed Leigh Goehring, managing partner at Goehring & Rozencwajg Associates, who said his long-term target for gold is $10,000 an ounce.

Gold price wants clarity after Powell's hawkish stance - analysts

"We're getting closer to the explosion of gold prices to the upside. I'm a big believer that inflation is not going away. It's going to continue to be a problem," he said.

Barclays Bank's chief market strategist Gerald Moser, said that he could see gold prices rise 20% in the next 12 months.

Although investors appear to be ignoring gold as an inflation hedge, other central banks are paying a lot more attention. This week it was announced that both the Singapore central bank and the Irish central bank bought gold for the first time in decades.

According to reports, Singapore bought 26.35 metric tons of gold between May and June. This was the first time the Asian central bank bought gold since 2000. At the same time, Ireland's central bank bought two tonnes of gold, its first purchase since 2009.

Ireland's central bank Governor Gabriel Makhlouf also said that inflation is a growing concern for him.

"It's not so much a question of how long will this go on before I start to worry. It's more that if I see evidence that the blockages are not being fixed, or that different things aren't happening, then I will start to worry," he said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.