Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield.
In the face of a stronger dollar and speculation that the Federal Reserve could raise interest rates as many as three times this year, gold prices could move modestly higher with some help from emerging markets, namely China and India.
“From a different perspective, the gold to silver price ratio provides another viewpoint to assess the bullish or bearish trend in the gold market. Silver tends to move stronger in any trending direction: silver rallies sharper in a gold bull market, but it also falls sharper in a bear market,” reports ETF Daily News.
For more information on the gold market, visit our gold category.
Tom Lydon’s clients own shares of GLD.