Gold Tries to Find Groove Ahead of Holiday Weekend; Down Over 2%

from Kitco NEWS

Gold is trying to find its groove ahead of the Easter long weekend. The yellow metal was down 2.7% for the shortened holiday week. Gold is set to mark a third weekly loss in a row as expectations for a U.S. Federal Reserve interest-rate hike as early as next month increased. However, Simona Gambarini, a commodities economist for the London-based research firm Capital Economics, says even if the Fed hikes rates a few times this year, gold will remain firm. “With regards to gold, we remain positive on the medium-term prospects for the gold price, despite the fact that we expect the Fed to press ahead with a rate hike in June, followed by two further 25bps (basis points) rate hikes in the following two quarters,” she said. Gambarini highlighted two main reasons why gold will remain up despite a tightening rate cycle. “The first is the recent resilience of gold despite fading safe-haven demand and rising U.S. bond yields,” she said. “The second is growing evidence that gold is benefitting from a revival of demand for inflation hedges,” she added.

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