If inflationary pressures remain high where could gold pricing go to in 2022

New York (Nov 12)  Market participants might have been numbed by the government's release of the October inflation rate which came in well above economists polled by the Wall Street Journal. However, the same market participants have seen prices rise dramatically over this last year especially energy and food costs.

The inflationary rate increased by 0.9%, well above the 0.6% prediction by economists. More alarming, last month’s dramatic inflationary rise amounted to a year-over-year rate of inflation of 6.2%. This is the first time since November 1990 that Americans have seen inflation spiral so out of control.

The Federal Reserve, as well as the current administration, are still toeing the line that the recent surge in inflation is transitory, temporary, and will decline over time. While the Fed has acknowledged that the current rate of inflation is much greater than anticipated and that it will persist for much longer than originally projected.

They have been emphatic about the fact that the vast majority of inflationary pressures are due to labor shortages and supply chain bottlenecks that are the result of an economic recovery leading to extreme pent-up demand. The Federal Reserve and the current administration are also emphatic about the fact that inflationary pressures will normalize by the middle of 2022.

However, many analysts including myself are also emphatic in the belief that recent rises in inflationary pressure will remain much longer than the Federal Reserve is forecasting. Ask any consumer who has been witnessing extreme rises in the costs of goods and supplies and they might say; persistent is the new transitory in regards to inflation.

My last two articles have been focusing upon a short-term and interim term price target for gold. These technical studies concluded that gold would trade above $1835 by the end of 2021. While I was correct in that we would see gold trade that high this year, the timeline to achieve that goal was greatly accelerated when the current inflationary was released this week. Our studies are currently forecasting that gold prices will challenge $1900 per ounce by the first quarter of 2022.

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