- Peter Schiff called the gold price sell-off “misplaced” amid recent declines
- He challenged the view that rising inflation stops the Fed from cutting rates
- Schiff said falling real interest rates are bullish for gold prices
Market veteran Peter Schiff called the sell-off in gold prices “misplaced”, even as the metal prices hit their lowest in four months, days after logging its biggest weekly loss in about 43 years.
Schiff, who is the Chief Economist at Europac.com, has challenged the current market narrative and has said that the assumption that rising inflation will prevent the Federal Reserve from cutting rates, and therefore weaken the gold price, is incorrect.
“Selling gold because rising inflation will keep the Fed from cutting interest rates, when rates are already too low, makes no sense,” Schiff wrote in a post on X.
Also Read: Gold Price Today: Yellow Metal Tumbles 7.5% On MCX Amid Geopolitical Tensions
He wrote that the falling real rates are bullish for gold, adding, “It's the stock market that needs rate cuts. That's why it makes no sense that stocks are down so little."
Schiff argued that the interest rates were already low compared to inflation, and if inflation rises without a matching increase in rates, real interest rates (after adjusting for inflation) will fall.
Falling real rates are historically supportive of gold prices, as they reduce the opportunity cost of holding the non-yielding asset.
Schiff noted that the stock markets have not fallen much, despite relying more on interest rate cuts, and the mismatch was not reflective of the actual economic situation. His comments suggest that investors should not make any decisions in panic and not sell gold solely on the expectations of delayed rate cuts. The broader economic parameters may still support gold.
Gold prices had dropped more than 10% last week, marking its steepest weekly loss since February 1983. The metal has entered into bear territory, having retreated about 25% from its record peak of $5,594.82 an ounce, reached on Jan. 29.
Also Read: Gold, Silver Price Today, March 23: Check Prices In Mumbai, Delhi, Chennai, Kolkata, And More
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