https://www.engineeringnews.co.za

Gold seen climbing as Yellen sets scene for negative rates

16th March 2017

By: Bloomberg

  

Font size: - +

SINGAPORE – Gold will rise after the Federal Reserve pledged to stick to its gradual pace of tightening as negative real interest rates deepen and weigh on the dollar, according to Wayne Gordon, executive director for commodities and forex at UBS Group’s wealth management unit.

The Fed raised rates by a quarter%age-point Wednesday, and policy makers penciled in two more quarter-point increases this year and three in 2018, unchanged from projections in December. Chair Janet Yellen said the central bank was willing to tolerate inflation temporarily overshooting its 2% goal and intended to keep its policy accommodative for “some time.”

“Last night was really setting the scene for the next three-to-six months,” Gordon said in a Bloomberg TV interview. “Yellen was very, very clear” that although she sees risks to the economy as balanced and sounded more optimistic, she’s going to stick to three rate hikes this year and three next year, he said. “That means real interest rates go deeper into negative territory in the US, that means a weaker US dollar and it means a better gold price.”

Gold is up 7% this year as investors bought haven assets amid political risks such as Donald Trump’s presidency, elections in Europe and the Brexit process. Precious metals are top of Morgan Stanley’s commodity picks. But Societe Generale SA recommends selling on rallies as it sees gold declining amid further tightening by the Fed and limited impact from political events.

Spot bullion rose 0.7% to $1 227.87 an ounce by 12:15 p.m. in London on Thursday after jumping 1.7% a day earlier, the most in six months. UBS sees gold at $1 300 this year, while Societe Generale has forecast an average of $1 125 in the fourth quarter.

Policy makers forecast inflation will reach 1.9% in the fourth quarter this year, and 2% in both 2018 and 2019, according to quarterly median estimates released with the Federal Open Market Committee statement. The Fed’s preferred measure of inflation rose 1.9% in the 12 months through January, just shy of its target.

Edited by Bloomberg

Comments

Showroom

AutoX
AutoX

We are dedicated to business excellence and innovation.

VISIT SHOWROOM 
John Deere (Pty) Ltd
John Deere (Pty) Ltd

In 1958 John Deere Construction made its first introduction to the industry with their model 64 bulldozer.

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.101 0.16s - 156pq - 2rq
Subscribe Now