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Gold pulls back after early gains
Published on 24.10.2016 23:14

The gold price reversed its gains in afternoon trading today on the back of strong data out of the US raised expectations of rate hike from the US Federal Reserve before the end of the year.

At 8.06pm (GMT) the gold price was trading at US $1,263 down from a high of $1,271 earlier in the session.

Figures out earlier today from America showed market manufacturing (PMI) jumping to 53.2 against analysts’ expectations for a figure of 51.5, which in turn sent the US dollar higher and the gold price lower.

Some now predict this is the start of a positive uptrend in the manufacturing sector and may be a sign of things to come, after Donald Trump and Hilary Clinton square off in next month’s US presidential elections,

 "Both output and new orders are rising at the fastest rates for a year amid increasingly widespread optimism that demand will pick up again after the presidential election, which has been commonly cited as a key factor that has subdued spending and investment in recent months," said Chris Williamson, chief business economist at IHS Markit.

As we move past the US Presidential elections, and an expected rate hike in December, some including Executive Chairman Mark Mobius of Templeton Emerging Markets Group expect that gold will regain its strength as the US Fed proceeds with caution on tightening monetary policy.

Mr Mobius predicts that gold will jump as much as 15 percent next year on the back of the Fed’s rate hikes.

 “The Fed is going to increase the rates by a little bit but not excessively and there is no guarantee that a rise in interest rates will put people off,” he said in an interview at a Bloomberg event in Mumbai. 


Andrew Masters

Analyst

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