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Gold seen rising to 4 year high as fed “Gentle” on rates?

*Bloomberg, by Ranjeetha Pakiam, June 4, 2017

“Gold may extend gains after climbing to the highest level in six weeks following disappointing monthly reports on U.S. employment and wages, according to two analysts attending a metals conference in Singapore this week. Prices will probably increase to a four-year high above $1,400 an ounce this year as a “less than inspiring” recovery means the Federal Reserve won’t step up the pace of increases in borrowing costs, leaving real rates in negative territory, according to Nikos Kavalis, director and founding partner of Metals Focus Ltd.”

Gold touched $1,282.11 an ounce on Monday, after jumping 1 percent Friday as the U.S. payrolls report missed expectations. While the Federal Reserve is poised to raise interest rates at its meeting next week after increases in March and December, investors increasingly doubt the central bank’s projection for additional hikes. Goldman Sachs Group Inc. pushed back its forecast for a third rate increase this year to December from September. “The Fed is going to be very, very gentle in how it handles monetary policy hikes,” Melek, who’s director and global head of commodity strategy at TD Securities Inc., part of Toronto-Dominion Bank, said last week before the data. “As we move deeper into 2017, we are probably going to expect less and less aggressive actions, so chances are that the Fed will certainly hike in June, but after that, the certainty and then the rate that they’ve been talking about, may not actually materialize to the same extent. We’re fairly confident that gold should do well.” Both Melek and Kavalis are scheduled to discuss the outlook for precious metals on Tuesday at a gathering organized by the Singapore Bullion Market Association.”

“Monday, Gold traded at $1,280.68 by 9:25 a.m. in London, supported by some haven demand after a weekend terror attack in London. Gold’s rally has been more about a reappraisal of the likely path of U.S. monetary policy in light of disappointing economic data, rather than any risk premium associated with the appointment of a special counsel to investigate the relationship of Trump to Russia.”


*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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