Gold Price Pullback Could Be Temporary

New York (Mar 21)  SPDR gold trust ETF holding has dropped further yesterday from 834 metric tons to 830.25 metric tons representing a change of -3.85%. This is mainly due to the reason that investors have reacted to the recent comments by different Fed members. Charles Evans, Chicago Fed president,  has given a clear message yesterday that there is no rule that the Fed can only increase the interest rate three times this year. This is not something new, however, the market has very much priced in that there will be only two more interest hike this year. Hence, we are seeing this pullback.

Having said that, four rate hikes for this year look way too optimistic and we need the economic data to be extremely strong and Trump’s economic plans perfectly executed. Therefore, the current sell-off could represent an opportunity to get back on the train if you have missed it for the first time.

Moreover, the political uncertainties over in Europe around French elections and Brexit are going to provide a lot of tailwinds for the gold rally. It was last night that we had the first presidential debate over in France and anything which increases the chances for Marine Le Pen to win the elections could be devastating for the market.

Similarly, the Brexit film is also going to start soon as Theresa May has announced yesterday that she is going to invoke the article 50 on the 29th of March. We have seen the trailer for the Brexit film so far and now we will get to see the film which is not going to be good at all.

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