Gold may top US$2000 if Fed cuts rates to zero: Citigroup

Marco Green
September 11, 2019

While they believe a global slowdown could hurt jewelry demand in China and the high price of gold will slow coin/bar buying, strong demand from institutional investors and central bank moves should provide support. Spot gold was up 0,2 percent at $1,509.01 per ounce.

We discuss investing in gold with Euro Pacific Capital CEO Peter Schiff, U.S. Global Investors CEO and CIO Frank Holmes and VanEck's Deputy Portfolio Manager for Gold Imaru Casanova.

"The renewed global risk appetite has spurred some weakness in safe-haven assets", said Phillip Futures analyst Benjamin Lu.

The environment is "bullish to the investor case for gold in the long run", he adds, noting he's been bullish on the metal since January. -China trade war, rising geopolitical risks and increased demand are creating the flawless storm for the precious metal.

Risk sentiment was also lifted on Friday after China said it would slash the amount of cash that banks must hold as reserves, while US Federal Reserve Chairman Jerome Powell said the central bank would continue to "act as appropriate" to sustain economic expansion.

Data from the Labor Department on Friday showed USA job growth slowed more than expected in August, but strong wage gains should support consumer spending and keep the economy expanding moderately.

Gold usually moves in opposite directions with the USA dollar, which means if the dollar goes strong, gold futures will fall as gold, priced in US dollar, becomes expensive for investors using other currencies.

Gold now is at its highest since February 2013 showing the effect the trade war has had on the metal's rise, as well as central banks around the world have been cutting interest rates to try and fight economic slowdown.

Hedge funds and money managers upped their bullish positions in COMEX gold and silver contracts in the week to September 3, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

On the technical side, spot gold is expected to test a support at $1,497 per ounce, a break below which could cause a further fall to $1,453, according to Reuters technical analyst Wang Tao.

Palladium jumped 1 per cent to $1,551.48 an ounce and platinum gained 0.3 per cent to $952.38.

Other reports by Click Lancashire

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