Bullish as Gold rallies in face of expected Fed rate hikes


NEW YORK (Scrap Register): Gold has a bullish posture considering the metal has been able to rise despite a bearish factor -- expectations for higher U.S. interest rates this year, said Jeffrey Nichols, managing director of American Precious Metals Advisors and senior economic consultant for Rosland Capital.

Hedge funds and institutional speculators increased their already net-long gold position Thursday, Nichols said. “The thinking is, ‘If it isn’t going down despite expectations of a rate increase by the Fed and a stronger U.S. dollar, then it must go up!’” Nichols added.

“In recent weeks, with gold trading in a narrow range and good technical support apparent to all, perceptions of momentum have also shifted and today traders just didn’t want to lose out — or bet against —  a rising market,” he added.

“Additionally, there has also been a positive shift in inflation and inflation expectations offsetting the expected rise in interest rates. In other words, real ‘inflation-adjusted’ interest rates are falling, and this is -- and will continue to be— a big plus for the yellow metal,” Nichols noted.

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