Gold expected to lose momentum on hawkish stance

Despite trading at 1909.07 at the time of writing, the precious metal jumped to the highest in over a month. Economists see the yellow metal trading above $1,925 in the latter months of this year.

Ironically, higher rates now are good for gold later on as they would drive rates lower faster along the long end of the curve. The resulting Dollar weakness should be accretive for Gold longer term too.

Since there have been a lot of references to skewing policy to favor the lower end of income distribution, we judge the cuts would be aggressive as high unemployment would hurt that demographic most. To the extent that cuts real rates to levels below previous cyclical norms, gold should benefit.

Prices are expected to trend above $1,925 later in the year, with a significant upside risk in the months to come.