A Federal Reserve interest-rate increase this year shouldn’t shake investors’ faith in gold, according to Australia’s second-largest producer.
Bullion is trading near the lowest level in more than three months after slumping 3.3 percent on Tuesday, the biggest loss in over a year. Prices have tumbled on worries that central banks are poised to curb stimulus and that the Fed may be set to raise interest rates in December for the first time in 12 months as the economy improves.
The probability of a Fed hike in December has risen to 62 percent, from 54 percent a week ago, futures data compiled by Bloomberg show. Still, any increase in U.S. borrowing costs needs to take into account that central banks have cut rates about 600 times since 2008, Evolution Mining Ltd.’s Executive Chairman Jake Klein said Thursday in an interview with Bloomberg Television’s “Daybreak Asia”.
Klein said, “In context, conditions are still favourable for gold”.
“I’m optimistic on the gold price, because we are in an environment where we have unprecedented low interest rates. It’s difficult to see rates rising a lot”, continued Klein.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.