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Has gold finally hit rock bottom?

· gold,gold backed bonds,fed

In a new series, we’ll look at what could influence gold demand we step into the new lunar year.

The Fed's tightening weighed on gold

A major factor weighing on gold prices this year was the Fed’s tightening cycle. Since the Fed started the current rate hike cycle in December 2015, it has hiked rates nine times, with the latest hike in December. Gold struggles to compete with interest-bearing securities, as it doesn’t offer periodic income.

source: federal reserve

Dovish stance expected

The Fed’s rate hikes could invert the yield curve in the near-to-medium term. The Fed has maintained that its future decisions will depend on market data. However, the yield curve’s flattening and inversion could reduce the chance of rate hikes.

A slower-than-expected rise in rates—either due to slowing growth or other geopolitical concerns—could benefit gold.

What will support Gold in the Pig Year?

Speak with InProved's Gold Analyst to find out.

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