Gold price rises as dollar retreats on Fed caution

December 4, 2018

London (Dec 4)  Gold’s outlook improves as investors place bets on whether the Federal Reserve’s hiking cycle is close to played out as 2019 looms, and as portions of the Treasuries market may be flashing warning signs about the near-term stance.

• Bullion stands to benefit because of the slower pace of increases from the Fed, and any indications of a recession in the world’s top economy will revive haven appeal, according to Harish Galipelli, head of commodity and currencies at Inditrade Derivatives & Commodities Ltd. The advance came as investors have been bulking up their bullion holdings in exchange-traded funds.

• Gold’s rise follows advances in October and November -- the first sequential monthly gain since January. On Monday, a section of the U.S. Treasuries yield curve inverted for the first time in more than a decade, signaling some investors may be anticipating the imminent end of the Fed’s tightening cycle.

• It’s “difficult” to see gold going any lower, and the commodity should rebound as soon as “strong-dollar trend begins to fade,” Goldman analysts including Jeffrey Currie report. The bank maintained its three, six and 12-month forecasts at $1,250, $1,300 and $1,350.


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