Deutsche Bank: Softer U.S. Economic Data Means Rosier Outlook For Gold

By Paul Ploumis (ScrapMonster Author)
October 16, 2015 04:16:58 AM
The uncertainty over US Fed's decision on rate hikes has boosted prospects for gold, noted Deutsche Bank.Deutsche Bank: Softer U.S. Economic Data Means ‘Rosier’ Outlook For Gold
(Kitco News) –Growing doubts about when the Federal Open Market Committee might eventually hike U.S. interest rates have boosted prospects for gold, says Deutsche Bank.

As of early Thursday afternoon, Comex December gold has been as high as $1,191.70 an ounce, its strongest level in nearly four months.

“Gold prices have reached the highest level since June as real interest rates have slid backwards by roughly 20 basis points since the end of September,” Deutsche Bank says.

“Recent U.S. economic data now points to a weaker outlook than Fed policy-makers would have incorporated into their September proceedings, thus contributing to a rosier near-term picture for the precious metals complex as long as uncertainty remains high on the timing of U.S. policy normalization.”

The bank later adds, “We continue to expect precious metals to see the greatest benefit from weaker economic data, indicating a longer pause before FOMC members can credibly signal a first policy rate hike. We would also need to see market expectations gradually closing the gap with the Fed as a precondition, given the reluctance to trigger a potentially destabilizing surprise.”

Courtesy: Kitco News