The performance of gold prices will hinge on the next move by the Federal
Reserve, suggested BofA Merrill Lynch Global Research.
Key
Quotes
“Our US economics team highlights that recent monetary
easing in Europe and China has made a first rate hike by the Fed more likely
this year”.
“As such, we reinforce our cautious view on gold quotations:
while dovish comments from the Fed can indeed lead to short-term rallies, a rate
hike is set to ultimately remove support, unless it is accompanied by a pick-up
of inflation, which has so far however not materialized”.
“Beyond the
tactical upside to gold quotations, we note that physical gold buying has also
remained relatively muted”.
“Gold
on the local Indian and Chinese markets trades below global prices and at parity
respectively, suggesting buyers in those two countries have so far not stepped
up their purchases meaningfully”.
