“Geopolitical tensions continue to provide reasons to be positive on gold, with deteriorating situations in both Iran and Iraq, while the possibility of Israels Prime Minister Ariel Sharon not returning to office causes concerns over the Middle East peace progress,” said Barclays Capital analyst Yingxi Yu.
A more hawkish Fed, implying higher real interest rates, and a stronger U.S.
But George Milling-Stanley, chief gold strategist at State Street Global Advisors, does not think the recent gold price correction is anything to worry about as the Fed’s rate hike projections are far off in the distance.
Although gold typically performs poorly in a rising rate environment, sometimes that correlation does not apply.
Lloyd concedes that while Bitcoin and some other cryptocurrencies might eventually serve as an inflation hedge much like gold, due to their limited supply, the price of Bitcoin is influenced by too many other outside factors—like regulatory concerns, company adoption and governments creating their own digital assets—to be considered an inflation hedge right now.
Radomski, however, expects gold to keep declining over the next several months, sliding to as low as $1,500 or even lower and then recovering to the $1800 range by year end.