Gold hovers at three-month highs on dimming prospects of Fed rate hike
Gold prices are at three month highs above $1160 and advanced 4.9 per cent last week to finish at $1,173.40 an ounce. The precious metal capped its best week since July 2013 with its year-to-date gain at 10.6 per cent. Te prospect of the Federal Reserve raising rates have dimmed recently, giving some support to the commodity.
Gold has historically been considered a safe haven asset and carries no yield. It was under pressure last year as the Fed pledged to lift rates for the first time since the financial crisis.
Meanwhile, reduced expectations for a Fed rate hike led the US dollar to weaken — with the dollar index, a gauge of the greenback against its major counterpart, slipping 2.7 per cent this week.
Some analysts say that gold will be supported as the dollar stumbles amidst fears of recession as well as currency devaluation and debasement.
However, there are also some analysts who say that they expect gold prices to reach a bottom this year to around the $1,250 an ounce mark in the fourth quarter as “the fundamental backdrop has become less bearish”. There is also a chance that some of the immediate concerns over the global economy/ markets may subside, suggesting gold may give back some of the recent gains.
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