UNITED STATES November 09 2016 9:28 AM
NEW YORK (Scrap Register): While the U.S. presidential election is the immediate focus of markets, ultimately continuing low interest rates should remain supportive for gold, said TD Securities.
Gold ran higher last week after news that the FBI was again looking into U.S. presidential candidate Hillary Clinton’s e-mail issues, then fell back at the start of this week when the FBI said there would be no reversal of its previous conclusion that no charges would be filed.
“Through the U.S. election volatility, we expect that market participants will refocus on the likelihood of a December hike (very high at this point) but more importantly the evolution of interest rates next year,” said analysts at TDS.
“For now, we still expect that despite a December hike, the Fed will be increasingly conservative next year and leave rates at very accommodative levels. This environment of low rates, with increasing headline inflation rates (mainly pushed by energy base effects) will serve to keep real rates boosting the appeal of gold, especially with stock markets looking shaky and potentially setting up for a break lower should the Fed follow through with its rate hikes,” they added.