Another possible catalyst for gold entering the back of the year is lingering debate surrounding how many times the Fed can raise rates this year – one more is what many traders are betting on, and in 2018, three seems to be the bet there. Importantly, more investors are being lured to gold.
“However, continued rate hikes threaten to reverse near-record ETF inflows, as still-manageable inflation would push real interest rates well above levels that attract investor interest,” according to Morningstar. “We expect gold prices to fall through 2018, before increased Chinese and Indian jewelry demand catalyzes a rebound. Investor outflows can strike suddenly, but a full recovery in jewelry sales will take time.”
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Tom Lydon’s clients own shares of GLD.