” The 5 rate hikes seen up until now in this present cycle all resulted in the same habits with gold selling ahead just to rally strongly once the announcement was made,” Ole Hansen, head of product method at Saxo Bank in a note Tuesday. “The last couple of weeks ahead United States rate hikes have actually shown in the past to be a great buying opportunity.”
Nevertheless, Hansen described that the economic information and the growing hazard of a global trade war do not support aggressive action from the Federal Reserve, which should be favorable for gold costs.
Hansen included that he remains a long-term gold bull as long as prices remain above assistance at $1.285.
In its previous financial forecasts, the reserve bank showed that it forecasted three rates of interest three hikes this year. In the last couple of weeks, expectations have increased for more powerful action. Hansen noted that markets are pricing in a 26% chance of four rate hikes this year.
Most just recently, inflation numbers, launched Tuesday, support the view that the Federal Reserve will be hesitant to raise interest rates four times this year, according to some financial experts.
If history is any guide, next week could indicate a considerable purchasing opportunity for gold investors as long as prices hold critical support above $1,285 an ounce, according to one analyst.
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Hansens comments come as gold prices manage to hold near session highs, following an in-line reading in Januarys Consumer Price Index and increasing geopolitical concerns after President Donald Trump revealed that he fired Secretary of State Rex Tillerson and changing him with CIA Director Mike Pompeo.
While the Federal Reserve is extensively expected to raise interest rates next week by 25-basis points, Hansen stated that the secret for the gold market will be the main banks forward guidance.
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