The gold price has drifted slightly lower for the 2nd day in a row on the back of profit taking as the US as the US celebrates thanks giving but some predict it’s only temporary and rebound is on the cards next week.
The main beneficiary for gold is going to be the inevitable pullback in the US dollar which investors have been flocking to over the last few months in anticipation of future rate hikes from the US Federal Reserve which doesn’t look as certain as previously.
Most in the market believed that the Fed would hike rates 4 times over the next 13 months with the next one coming in December followed by another 3 hikes next year as the US reaches full employment and business confidence surges due to the proposed tax cuts to be introduced next year.
Some analysts now believe that only 2 more hikes will be delivered from the Fed over the next year which will not be enough to support the US dollar as an interest bearing asset and investors will look elsewhere and gold is set to benefit
"I think gold will move back towards $1,300 next week or the week after, maybe on the back of dollar weakness," Georgette Boele, commodity strategist at ABN AMRO in Amsterdam, said. "There are still some longs in the market, so there's more technical momentum as they try to push prices up again to see what happens in the last weeks of the year."
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