THEgold is going through a rally phase, in the opposite trajectory to his weak performance in 2018. The metal is currently trading at almost $1.290 an ounce, sixty more than a month ago. There volatility of cyclical assets such as stocks and oil has brought investors' attention back to safe-haven assets.
The rise of gold is also favored by the growing geopolitical fears: The US government's deadlock has reminded investors of the structural vulnerabilities of the US – the country seen as the driving force behind the world economy in recent times. L'galloping uncertainty around Brexit it is also a further source of concern for investors.
Finally, the market (at least judging by the Fed Funds futures) expects interest rates to rise less in 2019 than a month ago. Even though the Fed's dot plot guidance points to two rate hikes this year, the Fed Futures points to zero. Last week the Fed said it will pay more attention to market conditions. So while economic data is very mixed, market conditions could force the Fed to be less aggressive this year.
This could represent an advantage for gold. We expect the latter to continue to rally this year, especially as a result of sentiment that he continues to improve from last year's very low levels. By the end of the year, we could see gold climb to nearly $1370 an ounce.
