Gold investors waiting out new momentum in U.S. dollar - RBC's Gero
(Kitco News) - Surging momentum in the U.S. dollar continues to keep a firm lid on the gold price; however, one market strategist said that this new momentum is less about a change in fundamentals in the U.S. economy reflects weakness in other countries.
In a note Wednesday, George Gero, managing director at RBC Wealth Management, said that expectations of further stimulus measures from the European Central Bank are weighing down the euro. Meanwhile, growing economic uncertainty over Britain's plan to leave the European Union is dragging down the British pound.
The shifting expectations have pushed the U.S. dollar index back above 93 points to a one-month high.
Gero said that gold investors are now sitting on the sideline because of the U.S. dollar's rise. Despite some hesitant sentiment among gold investors, Gero said that uncertainty ahead of the U.S. presidential and general elections and growing concerns about a correction in equity are creating important support for gold prices.
"Look for buyers on larger dips to begin adding expectations of $30.00 silver and $2,000 gold," he said in the note.