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Gold price's break above $2k won't last; Correction is coming as fear subsides - Lobo Tiggre

Kitco News

Fear in the markets has driven up demand for safe haven assets, which is why both the dollar and gold have been rallying in tandem over the last month, but it’s only a matter of time before this fear subsides, said Lobo Tiggre of The Independent Speculator.

Gold has briefly breached $2,000 an ounce between 5:00 am ET and 6:00 am ET Monday before falling back down. This would be the first time since August, 2020 that gold has hit this price level. Spot gold last traded at $1,998.60 an ounce.

Tiggre told David Lin, anchor for Kitco News, that gold’s next price move should be down, not up.

“The honest truth is my next target is probably downwards, near-term downwards. I suspect that the hot fighting in Ukraine can’t last much longer and when the fighting cools off, the fear fades, and gold’s recent tailwinds turn into a headwind,” he said.

Long-term fundamentals, including high inflation, a potentially stagflationary economy, and negative real interest rates, should propel gold back up above $2,000 before the end of the year.

“I think there’s a very real risk to the downside in the near-term for the end of the war one way or another,” he said. “I do think that the inflationary trends, the stagflationary trends, still call for plus $2,000 gold by the end of the year, plus $2,100 is easy. If we were to hit an inflation-adjusted high, it’s plus $2,800. That would not be hard to reach by the end of this year at all.”

Sanctions on Russia are likely going to have reverberating effects around the world, especially since Russia is a major exporter of fertilizer, and so the entire global agricultural industry would be impacted.

For more information on how sanctions are going to impact the global economy, watch the video above.

Follow David Lin on Twitter: @davidlin_TV

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