Last Five Rate Hikes Has Been A Buying Opportunity Gold Investors - Saxo Bank
(Kitco News)- If history is any guide, next week could signal asignificant buying opportunity for gold investors as long as prices hold criticalsupport above $1,285 an ounce, according to one analyst.
“The five rate hikes seen so far in this current cycle allresulted in the same behavior with gold selling off ahead only to rallystrongly once the announcement was made,” Ole Hansen, head of commoditystrategy at Saxo Bank in a note Tuesday. “The last couple of weeks ahead USrate hikes have proven in the past to be a good buying opportunity.”
Hansen added that he remains a long-term gold bull as longas prices stay above support at $1.285.
While the Federal Reserve is widely expected to raiseinterest rates next week by 25-basis points, Hansen said that the key for thegold market will be the central bank’s forward guidance.
In its previous economic projections, the central bankindicated that it projected three interest rate three hikes this year. However,in the last few weeks, expectations have increased for more forceful action.Hansen noted that markets are pricing in a 26% chance of four rate hikes thisyear.
However, Hansen explained that the economic data and thegrowing threat of a global trade war don’t support aggressive action from theFederal Reserve, which should be positive for gold prices.
Most recently, inflation numbers, released Tuesday, supportthe view that the Federal Reserve will be reluctant to raise interest ratesfour times this year, according to some economists.
Hansen’s comments come as gold prices manage to hold nearsession highs, following an in-line reading in January’s Consumer Price Indexand rising geopolitical worries after President Donald Trump announced that hefired Secretary of State Rex Tillerson and replacing him with CIA Director MikePompeo.
April Gold futures last traded at $1,328 anounce, up 0.55% on the day.By Neils ChristensenFor Kitco News
Follow neils_C
nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.