NEW YORK (Scrap Register): Commerzbank said the continuing uncertainty about the U.K.’s exit from the European Union, dubbed Brexit, and expectations that the Federal Reserve is done hiking interest rates for a while should underpin gold.
The U.K. Parliament Tuesday rejected a second Brexit deal that had been negotiated by the government of Prime Minister Theresa May, and a vote is planned Wednesday on whether to leave the EU without a deal.
“The never-ending Brexit chaos should keep demand for gold as a safe haven at a high level,” Commerzbank added.
Analysts also comment that “subdued” inflation data in the U.S. is likely to encourage the U.S. Federal Reserve to maintain its cautious approach.
“As we do not expect any Fed rate hikes this year, gold should remain an attractive alternative investment,” Commerzbank noted. “This is also suggested by the low real interest rates, which have even been negative for many maturities in some countries like Germany.”