Gold Prices Firm; Outlook For Gold Turns Optimstic

Amid weaker dollar which is seen to move lower from its 20-year high, gold has gathered some steam and is now comparatively above the $1700 per ounce mark.

Furthermore, gold which had been languishing for almost 3-months on firm dollar and bond-yield is believed to be carving out its bottom as prices hold support at $1700 per ounce as per one of the portfolio manager who is quoted in a Kitco report.

Outlook for gold positive

John Hathaway, senior portfolio manager of Sprott Hathaway Special Situations Strategy in an interview with Kitco News said while gold still faces some near term headwinds, the fundamental outlook is beginning to shift. His bullish outlook on gold comes ahead of the Fed rate hike decision slated for July 7, when the Fed is largely expected to hike rates by 75 bps.

Why bullish outlook for gold?

The portfolio manager says that one of the reason for his optimism on gold is due to the fact that the Fed is closer to the end of the tightening cycle than it is to the beginning. Further he is of the view that the tightening measure has already led the world's most developed economy into a recession."The Federal Reserve's hawkish posturing is cratering the economy," he said. If you look at the economy on a real-time basis, it's declining. "Any sign that the Federal Reserve is relenting on rate hikes will be good for gold."

He also went on to add that he expected the Fed to taper its rate hike spree by the end of the summer. This is as the Fed will not like push the economy into recession ahead of elections scheduled in November.

Hathaway said that he would expect the central bank to start to pivot and slow the pace of rate hikes by the end of the summer. He added that the central bank will not want to push the economy into a recession ahead of the November election.

Gold rates in India

Mirroring international gold rate on the MCX is gaining and at the time of writing this copy is at Rs. 50,677 per 10 gm.