Gold Price Rally Continues as Global Markets Wobble

New York (Mar 23)  Gold has gained more than 2% since mid-March as economic fundamentals lined up to support a rally, and could be poised to gain again on Thursday if The Trump administrations reforms are rattled by a failure to push through plans to repeal and replace the Affordable Care Act.

Gold traded early in Europe's session at €1,156.54 ($1247.30) in line with its Wednesday close and in relatively flat trading on Europe's major markets. The metal is up 2.3% since March 14, the day before the Federal Reserve set up the rally by hiking interest rates but damped expectation of future increases by declaring that U.S. monetary policy will remain supportive for "some time."

Dollar denominated generic gold futures for delivery in June have risen 4% to $1.250.70 over the same period.

Gold stocks have unsurprisingly profited. AngloGold Ashanti (AU) finished Wednesday at $11.07, down on the day but up 12.5% since March 14. London-listed Fresnilo (FNLPF) is up 8% over the same period and traded Thursday at 1,561 pence, while Polymetal (AUCOY) has gained 10.6% to trade Thursday at 1,027 pence. London's FTSE 100 has fallen 0.6% over the same period.

The question now is does this gold bull have legs?

Goldman Sachs is equivocal: "We believe that while both a bull and a bear case can be made for gold, in the near term, risks remain skewed to the downside (strong US economic data combined with a pick-up in global demand indicators may lead to rotation out of gold)," the broker noted in the wake of the Fed's rates decision. "Our economists recently suggested that the Fed might be slightly behind the curve: this could require faster tightening than the market is currently pricing in, a potential negative for gold."

Source: TheStreet