The Gold Report: What’s your gold price forecast for the rest of 2015?
Joe Reagor: For the full year, our average price is $1,260 per ounce ($1,260/oz). If the U.S. dollar were to remain steady and not strengthen, gold could reach $1,300/oz by year-end.
TGR: Gold was sold off heavily in the last week of April based on an anticipated interest rate hike by the Federal Reserve. Should the Fed actually raise the rate, how much of a negative effect will that have on gold and for how long?
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JR: It is commonly believed that rates will rise because the U.S. economy is improving, but we keep getting mixed signals. The most recent jobless claims were exceptionally good, but the Q1/15 GDP increase was only 0.2%. If we see a stiff rate increase because the Fed thinks the economy is strengthening, that could be bad for gold. Should the Fed choose to raise rates slowly over time, giving it the option to lower rates again if need be, I don’t think that’s bad for gold.
TGR: Some people believe that a stiff rate hike would spook the market and cause an equities crash. What do you think?
JR: I doubt the Fed would move on that without first providing a cushion to the markets. Should a rate hike spook the market and force the Fed to quickly lower rates again, I think gold would move higher quickly.
TGR: Is it possible an interest rate hike has already been priced in to the price of gold?
JR: The expectation of rate hikes is definitely priced into gold inherently through the strength of the U.S. dollar, as compared to, say, Europe, which has been …read more