Katherine Judge and Taylor Rochwerg, analysts at CIBC, point out that a weaker US dollar on the horizon prefaces higher gold prices.
“The correlation between the price of gold and DXY has strengthened over the course of the past year, but at the same time, other traditional drivers of gold - inflation and interest rates - have become less important in guiding gold prices.”
“Our forecast for a weaker USD over the course of the year should therefore work to extend gains in gold, while a relatively stable interest rate and inflationary environment should work to limit volatility in the price of gold.”
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