SMM News - What is the ultimate driver of gold?

January 24, 2017 2:15AM CST

“Gold could get a short-term bounce from uncertainty about a new Donald Trump administration, but ultimately the metal’s direction likely will be influenced by future monetary policy of the Federal Reserve,” said Bob Haberkorn, senior commodities broker with RJO Futures.

“There is a big unknown,” he says about specific policy changes after the change of power in the U.S. “I think we have more upside to go.” However, that boost could be limited while the market continues to digest how aggressive the Fed might be in upping interest rates, he continues.

“The theme is still the Fed,” Haberkorn said. “What’s the Fed going to do?” Higher U.S. interest rates tend to hurt gold, and vice-versa, since tighter monetary policy underpins the U.S. dollar and increases the so-called “opportunity cost” – or lost interest earnings – of holding a non-yielding asset like a precious metal, Haberkorn added.

To read the rest of the article, click here .

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.