Gold Bulls emerge as equities remain nervous
As the gold price moves in reaction to Trump’s policies and dollar devaluation rhetoric, gold bulls are emerging, predicting an average range of $1,101-$1,379 this year. MarketWatch’s news editor Rachel Koning Beals suggested a price increase for the precious metal as an inflation ‘sleeping giant wakes’.
Koning Beals highlighted a 9% gold price rise in 2016 and quoted Rob Lutts, chief investment officer of Cabot Wealth Management as saying ‘It’s hard to be bullish on gold and the stock market, but inflation is the linkage there. I’ll buy stocks because I know companies can adjust to inflation. But with an inflation backdrop, gold prices will clear $2,000 an ounce in two to four years.’
The Federal Reserve’s report this week has been noted for its lack of dynamism: Brien Lundin, editor of Gold Newsletter, was quoted in The Week as calling it the most ‘anti-climactic’ in memory. The report downplayed an imminent rate rise.
Forbes called the report ‘particularly dovish’ as it weakened the dollar and ultimately pushed gold prices higher. Adrian Day, head of Adrian Day Asset Management, was sourced as saying that although the Fed is keeping a close eye on price pressures, he doubts that they will be able to stay ahead of the inflation curve and that will be bullish for gold.
Forbes also quoted Bob Haberkorn, senior commodities broker with RJO Futures, as saying gold is benefiting from market jitters over increased ‘saber rattling’, particularly in relation to, Trump’s tweets on Iran which are made equity markets nervous. ‘There is a sense of unease in equity markets that is benefiting gold,’ he said.
Yesterday gold was changing hands for $1,217 in early trading in London.
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