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Gold Price Is Set For a Rebound

May 4, 2017
By Daisy Joseph

The strengthening of the US dollar and Fed’s approach towards rate hikes affects commodities and assets in a large way. Gold which was considered as a haven commodity has lost the interest of the investors as the dollar rallied after the election of Donald Trump. Now that dollar has started weakening in the forex market, it has helped to push the gold price up.

Gold prices are now picking up after the consolidation of the US dollar. The Fed Funds Futures announced rate hikes in 2017 but it is not set to come up faster. The focus is now on the US GDP figures of the first quarter. The forecast predicted that the gain would be 2.1%. However, the current data showed that the annualized gain is at 1%, which is far less than the expected value. Compared to the past three months, the gain has declined.

Some experts predict that there could be a downside surprise when the US economic data continues to underperform. The Fed rate hike bets may slow down due to soft GDP. Investors are not betting on Fed increasing the interest rate immediately. However, 70% are betting in favor of a rate hike in June. Fiscal spending boost continues to delay and there is a dip in the growth. This means that tightening may be postponed until the second half which boosts non-interest-bearing yellow metal.