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Fewer rate hikes to boost gold
Published on 01.02.2018 11:47

Gold has managed to find good support over the last 3 trading sessions at around $1,340 while also making a higher top from the September highs and the chances for a push higher looks promising.

The latest Fed rate decision yesterday was no surprise and rates remained on hold with the following statement pointing to a rate hike in March which was already factored into the gold market long ago.

It was interesting that Fed president Janet Yelen noted in the following statement that she expects inflation in the US to pick up this year and eventually hit the target rate of between 2 and 3 percent.

The Fed has already been quite aggressive with their rate hikes considering inflation remains below their target and it’s possible that after the rate rise in March, they may have to delay any further moves until inflation actually does pick up as they can’t keep raising rates in a low inflationary environment.

At least 3 rate hikes are expected this year by the Fed but when as expected, inflation remains subdued and they find that they have to leave them on hold, gold is set to benefit.

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Andrew Masters

Analyst

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