BAKU, Azerbaijan, May 11. Gold continues to fall in value for the third week in a row, as the US Federal Reserve System (Fed) announced an expected rate hike of 50 basis points, and the yield on long-term treasury bonds continued to increase almost nonstop, Trend reports via weekly research from JP Morgan investment bank.
Currently, gold at about $1,860 per ounce has lost approximately 6 percent, compared to the April daily closing highs around $1,980 per ounce, the report said.
“In light of this, our economists revised their Fed call and now see 50 basis points hikes at the next two Fed meetings (June and July), before the pace of hiking steps back down to 25 basis points, ultimately leaving the Fed funds target back in the 3-3.25 percent range by March 2023,” JP Morgan said.
Although, despite the decline in gold prices over the past few weeks, the premium of bullion to the estimated fair value based on real returns over 10 years is far from declining, reaching another high at around $495 per ounce on April 6.
In other words, the current 10-year real yield levels in the US imply a fair value of gold of about $1,380 per ounce at the moment, the report said.
JP Morgan generally maintains a bearish gold sentiment throughout the year, keeping the quarterly forecasts at $1,850 per ounce in the second quarter of 2022, $1,800 - in the third quarter, and $1,720 - in the fourth quarter.
---
Follow the author on Twitter: @mariiiakhm
