Gold has been trending with the dollar in recent trading sessions, signaling a decoupling of the yellow metal’s traditional negative correlation on the U.S. dollar, said George Gero, managing director of RBC Wealth Management.
Gero said that this trend reversal may be caused by strong demand for gold outside the U.S., especially in countries that needed gold the most, like Venezuela, but could not afford it in U.S. dollar terms.
“It’s interesting that gold, in the just last few sessions, is learning to live with a strong dollar, and the reason for the strong dollar hasn’t really been the possibility that the Fed is going to hike rates again,” Gero told Kitco News.
“Actually, traders are all keen on the next May 1st Fed meeting which could be very, very interesting for traders, to see if the fact that these strong GDP numbers today will bring back some talks about maybe, after all, there could be a rate hike.”
Gero added that a rate hike may not be likely, owing to the fact that most central banks around the world still have loose monetary policies, since a lot of these countries are not “booming” like the U.S.
- Source, Kitco News
