Opinion with Peter Hug
Silver and Gold are Looking Good in 2019 - w/ Peter Hug
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Precious metals will likely rally on the back of a weaker dollar in the first half of 2019, owing to higher interest rates in Europe, this according to Peter Hug, Global Trading Director of Kitco Metals.
“Looking forward, I’m a little concerned now that almost every analyst you speak to believe the Fed is not going to move in 2019. Some are even taking the December rate increase that is expected next week off the table. We think the Fed does go in December. I think from a view perspective, if the Fed does not raise in December, I think it’s going to send the wrong signal to the market that they’re worried, so I think the Fed goes a quarter point next week,” Hug said.
As the Fed will keep rate hikes on pause in the first six months of 2019, the European Central Bank will likely begin monetary tightening of their own, and interest rate differentials will contribute to a lower dollar, Hug said.
“We think they’re going to be on hold possibly for at least six months in 2019. Now in that context, we think if the Europeans follow through on what their mandate is for 2019 when they are going to start normalizing rates, we think that will be negative for the dollar, and price positive for the metals,” he said.
Hug added that while he is bullish both gold and silver, he believes that silver will outperform because, on a percentage basis, it has more room to rally.