Gold To Soar To $1,360 After Fed’s June Announcement, Says This Analyst
(Kitco News) - Gold rally is on its way and the precious metal could shoot up to $1,360 in just three weeks, says one analyst, citing the upcoming Federal Reserve rate announcement in June.
“My belief that a rally to $1,360 or higher in gold within the next three weeks is based not on hope, but data,” Global Pro Traders CEO David Brady said in a Sprott Money’s post published on Thursday. “Signs that a significant gold rally is pending or has already begun.”
Brady’s analysis lists market fundamentals, positioning, sentiment, and technical outlook: “Based on declining open interest, falling yields, a falling dollar and declining rate hike expectations, the data has only improved for gold,” he noted.
One of the key things to watch in the next three weeks is a possible Federal Reserve rate hike on June 13.
There is an 86.3% chance of a Fed rate hike at the upcoming FOMC meeting, according to the CME FedWatch Tool.
In case of another rate hike, gold is likely to go up, said Brady, pointing to a recent trend.
“Gold has rallied after five of the last six rate hikes, and given the decline from $1,369 to $1,281 in recent weeks ahead of the next meeting, plus all the signals pointing north for Gold, this will once again likely be the catalyst for the next rally,” Brady explained.
There are also geopolitical tensions that are playing into the hands of the yellow metal, including Italy and Spain.
“Given the crises in Italy and Spain in the past week and the growing concern regarding possible ‘contagion’, expectations for a rate hike have diminished somewhat, as can be discerned from the massive drop in the 2-year treasury yield recently. I still expect Gold to rise post the FOMC meeting whether the Fed raises rates again or not, but if they don’t, Gold could truly soar on such news.”
Gold prices were trading largely flat on the day as Asian markets opened on Friday, with spot gold on Kitco.com last at $1,298.60, up 0.05% on the day and June Comex gold futures at $1,298.20, down 0.15% on the day.