In a June 4 Gold Market Talk, the World Gold Council said rising inf pressure
may force the Fed to hike, and that when hikes occur they can counterintuitively
be supportive for gold. Historical data show gold rose in more than half of
rate-hike episodes. The Council said the dollar’s influence on gold prices
appears to outweigh rates; mid-cycle growth and yield convergence plus a trend
toward diversification away from US assets have set the stage for potential
dollar weakness. Structural demand from major consumers China and India and
ongoing central bank buying — which are less sensitive to US rates — could
provide further support for gold.
