Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors
Markets

Gold edges higher on dovish Fed

The minutes from the latest Fed policy meeting weren't as bullish about the US economy and an interest rate rise as some had predicted
gold bars in a vault
One analyst thinks gold is just at the start of its "biggest bull market ever"

Gold edged higher on Thursday, buoyed by a weaker dollar after minutes from the Federal Reserve July policy meeting suggested a rate rise won’t necessarily come any time soon.

The minutes showed US policymakers were divided as to whether to hike interest rates in the near future, a move that would have hurt gold.

A rise in rates would increase the opportunity cost of holding non-yielding commodities like bullion, which don’t offer interest or dividend like other securities.

It would also boost the dollar making the greenback-denominated metal more expensive to foreign currencies, reducing demand.

Analysts aren’t expecting much movement in gold prices until the Fed eases speculation by confirming one way or another what it intends to do with US interest rates.

“Until we have clarity around the US rate hike, gold is going to remain range bound between US$1,320 and US$1,370,” said Hamza Kahn, ING Bank’s senior strategist.

Although a rate rise would do more harm than good for gold, Yuichi Ikemezi, head of commodity trading at Standard Bank in Tokyo, says there are more supportive factors than just the dovish tone of the Fed.

“Nobody would be willing to sell gold aggressively even if there is a hike in rates, with the US presidential elections in November creating uncertainty.”

Gold on verge of ‘biggest bull market ever’

Gold has enjoyed a formidable rise in 2016 which has made it one of the top performing assets so far this year.

Despite the recent price surge, market analyst Peter Grandich, dubbed the ‘The Wall Street Whizz Kid’, believes this could just be the start for gold as he tips it to take off in the near future.

“The bullish fundamentals for gold grow almost daily,” explains Grandich.

“I personally believe gold is in the earliest stages of what can turn out to be its biggest bull market ever.”

He expects the price of the yellow metal to go “much, much higher”, and says we’re at a break out point, “where if and when it occurs, an acceleration to the upside will take place.”

Elsewhere in the world of precious metals, platinum and silver both recorded gains after hitting three-week lows yesterday.

Shortly before London close, gold was up US$1 to US$1,350, silver was up 7c to US$19.75 and platinum was also up US$9 to trade at US$1,123.


No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use