25.05.202212:11 Forex Analysis & Reviews: Gold prices on positive as S&P 500 slips

The S&P 500 is once again under selling pressure and the gold market continues to benefit from market volatility as prices hold above another critical resistance level at $1,850 an ounce.

As the broad-equity market index continues to struggle for a place in the sun, negative sentiment among economists and market analysts is on the rise. Many analysts expect significant price cuts by the end of the year.

In a recent report, market strategists at French financial conglomerate Societe Generale warned investors that stocks could be subject to huge headwind volatility.

The French bank also warned that the US economy faces rising risks of stagflation as inflation remains persistently high.

Market analysts at Bank of America also warn of stagflation. Economists say renewed weakness in equity markets could mean investors are now less focused on rising interest rates and more worried about slowing economic growth.

Bank of America sees the S&P 500 dropping to a low of around 3,200.

According to BofA's head of global research, this would be a typical 33% drop from peak to trough.

The Bank recommends that investors increase their exposure to the energy sector rather than commodities as a risk hedge.

Market analysts at CrossBorder Capital predict the S&P 500 will fall to 3,250 as Federal Reserve tightening continues to squeeze liquidity out of the market.

In the current environment, some market analysts continue to view gold as an important factor in diversifying the market and hedge against falling stock markets. Gold prices are well ahead of the S&P 500.

The broad market index is down 18% this year; meanwhile, gold, trading above $1,850 an ounce, is up more than 1%. While gold is facing some challenges as real interest rates turn positive, it continues to do its job as a safe-haven asset. Rising inflation and market volatility will continue to support gold prices.