However, investors remain largely confident that the U.S. economy will still expand, which may benefit riskier assets like stocks. Furthermore, while gold has somewhat benefited from the dovish stance from the Federal Reserve since a lower-for-longer interest rate would weaken the U.S. dollar and support gold prices, the same Fed comments would also bolster stocks and other risky bets for the year.
“Looking at the factors to drive gold prices, CIBC analysts said that falling real interest rates as the global economy slows will have a significant impact on prices this year. The analysts noted that because of the softer growth outlook, they expect the Federal Reserve to raise interest rates only once this year,” reports Kitco. “However, they added that inflation will continue to creep higher, meaning real interest rates will remain low, a positive for gold prices, as it will keep the opportunity costs of holding a non-yielding asset low.”
Investors have added almost $926 million to GLD this year.
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