Tuesday, 17 October 2017 05:34 WIB | GOLD CORNER |Gold OutlookGold Corner
Metals Focus sees a favorable backdrop for gold prices next year. After weakening for much of September, the metal is higher so far in October, helped in large part by U.S. dollar weakness as traders factor in less Federal Reserve hawkishness than previously was the case, the consultancy explains.
œWith the market still anticipating that the Fed will announce another rate hike this December, prices are likely to remain under pressure in the near term, Metals Focus says. œThat said, as much of this has already been factored in since mid-September, the scale of a further sell-off should be limited. Further ahead, U.S. inflation seems likely to increase, if only modestly.
As a result, the speed of the Fed™s rate hikes will continue to be slow and probably no faster than markets are currently pricing in. This in turn will perpetuate the current negative or low short-term real interest environment in the U.S. Meanwhile, the consultancy doubts the U.S. stock market™s rally will be sustained. Also, the macroeconomic and geopolitical backdrop likely will remain favorable for gold investment, Metals Focus says, citing uncertainty about the U.S. administration™s trade and foreign policies, ongoing tension between the U.S. and North Korea, populism in Europe, Middle Eastern conflicts and China™s economic challenges.
œAll this should underpin investor interest in gold, especially among institutional investors, Metals Focus says. œThis is the principal assumption behind our positive outlook for the gold price during 2018. With additions to investor long positions being relatively light YTD [year to date], this suggests that the likelihood for fresh inflows into gold next year is relatively strong.