ACRA: Rising Fed rates reduce investment demand for gold
Baku, Azerbaijan, Jan. 9
By Taleh Mursagulov - Trend:
The rising Fed rates will strengthen the position of the US currency and reduce investment demand for gold, Maksim Khudalov, director of corporate ratings group ACRA, told Trend on Jan. 9.
On the other hand, according to Khudalov, the low investment activity of gold companies in recent years will lead to a decrease in the metal's supply, which, according to ACRA, will lead to an increase in the metal's price.
"Nevertheless, we focus on the forecast range of $1,250 -$1,350 per ounce in 2019-2020," he said.
He added that amid reducing expectations for further growth in the Fed rates, gold will remain attractive to investors.
"Moreover, if the fall in the US [shares] market, which we observed in October-December, continues, the probability of investors' switching to a safer asset will be high," he said.
Khudalov also noted that after Christmas, there was an increase in the US shares market, but in general, problems in the economy, as well as possible defaults of large companies amid rising interest rates, could trigger a sharp drop in the S&P index.
"We do not consider this scenario as the main one, but in its realization we can expect a fall that is similar to that of 2008-2009," Khudalov said.
Follow the author on Twitter: @TalehMursagulov