The gold price finished the week down on Friday, marking its first weekly loss in the last five weeks but global uncertainty such as those surrounding the Brexit negotiations are likely to see the precious metal bounce back next week.
This week saw UK Prime Minister Theresa May’s Brexit deal soundly rejected and she now needs to come up with a new plan by Monday which some say is to short of a time frame and the chances of a Hard Brexit have grown which is only going to Benefit gold.
Once the Brexit fiasco is out of the way, the next moves from the US Federal Reserve are likely to be the main driver of the gold price with the main question whether they will continue to lift interest rates of are they done for this rate hiking cycle.
Higher rates are negative for gold as it is not an interest bearing asset unlike to US dollar.
One analyst has broken with the main ranks and noted that no matter what the Fed do, gold will win either way as higher rates will push the US economy into the doldrums which will see investors looking for safe haven assets while keeping rates on hold will leave investors fleeing the US dollar at the expense of gold.
“To me there are two outcomes: either the Fed continues raising rates and they drive the economy into our next recession, [or] if they stop or reverse course, then we see weakness in the dollar. Both scenarios are good for gold,” said Joe Foster, portfolio manager and strategist for VanEck’s International Investors Gold Fund.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 58% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 58% of retail investor accounts lose money when trading CFDs with this broker. Before deciding to trade foreign exchange you should consider whether you understand how CFDs work, your investment objectives, your level of experience and readiness of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|