UNITED STATES June 16 2017 10:28 AM
NEW YORK (Scrap Register): Standard Chartered says the cycle lows, after U.S. Federal Open Market Committee rate hikes, are rising, with Fed policy to decide gold’s future direction.
The past three Fed rate hikes have marked cycle lows for gold, and coupled with a likely softer physical floor in the coming weeks, support levels for the gold price have weakened, said Standard.
However, the cycle lows have risen after each of the past hikes. Wednesday’s 25-basis-point rate hike was expected, but weaker inflation and employment data have moderated market expectations for additional hikes, the bank continues.
The Fed continued to signal one additional hike for this year, but if the market starts pricing in the end to the current hiking cycle, this would remove a major headwind for gold and allow prices to breach the stubborn $1,300 an ounce threshold in a sustained move higher, in our view, said Standard.
If not, while it appeared the floor for prices had risen, physical demand has now weakened.