The gold price has snapped a 4 day losing streak today, buoyed on by US dollar weakness and lower expectations that the US Federal Reserve will hold off lifting rates next week.
At 8.42pm (GMT) the gold price was trading at $1,322 an ounce up from $1,318 in yesterday’s trading session.
Although there is still a possibility the Fed will lift rates, many see the move will do more harm than good, and may derail the fragile recovery of the US economy, as a higher US dollar might hit some industries such as the export sector,
“We don’t expect a dollar bull market in the future,” said Julian Phillips, a founder of GoldForecaster.com.
“We see that as over, because the Treasury and the Fed do not want a strong dollar. It will hurt the U.S. economy.” he added.
Others like Tyler Richey, co-editor of The 7:00’s Report noted that although most of the hype at the moment is targeted towards next week’s rates decision, it will ultimately be the Bank of Japan who will dictate the price of gold,
“If the BOJ underwhelms the market, then the yen will rally and the dollar will pullback which is supportive of gold,” he said.
“A disappointing decision from the BOJ will cause both stocks and bonds to fall which leaves only one destination for ‘safety’ and that is gold in this situation.”
He also mentioned that even if gold falls on the back of a rate hike this in itself will present an opportunity,
“Longer term, we would view such a pullback to towards $1,300 or below as a buying opportunity as gold has recently reversed direction from a 4-year downtrend and is now trending higher.” he said
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