Gold bull market run
Gold is in the early stages of a bull market, despite the gold price recently falling, according to fund manager, VanEck.
VanEck's portfolio manager and gold expert, Joe Foster, said the gold price fell last week on the back of a strengthening US dollar and hawkish views from the Fed. However, the market was showing signs of a bull run.
It was similar to the 2008 to 2011 secular bull market, where the gold price increased by 145 per cent, Foster said.
"This was because this was a period of heightened financial risk due to unconventional central bank policies."
Last week, gold was trading in the US$1,300 to US$1,350 price range and fell below US$1,300, but was expected to stabilise. If the Fed failed to raise rates in December the dollar would weaken and the gold price would strengthen, he said.
Nevertheless, if rates increased, it would likely be a repeat of the hike in December, he said, where significant stock market volatility turned investors to gold as a safe haven.
Current price weakness would also drive seasonal demand out of India and Asia, particularly as both regions were about to begin their festival and weddings seasons, he said.
The gold price would also be further supported as the global economy was weak and was in no condition to withstand higher rates, so demand would further increase, Foster said.
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