Fed Hike Shouldn’t Shake Faith in Gold, Says Mining Chief – by David Stringer and Yvonne Man (Bloomberg News – October 6, 2016)


A Federal Reserve interest-rate increase this year shouldn’t shake investors’ faith in gold, according to Australia’s second-largest producer.

Bullion is trading near the lowest level in more than three months after slumping 3.3 percent on Tuesday, the biggest loss in over a year. Prices have tumbled on worries that central banks are poised to curb stimulus and that the Fed may be set to raise interest rates in December for the first time in 12 months as the economy improves.

The probability of a Fed hike in December has risen to 62 percent, from 54 percent a week ago, futures data compiled by Bloomberg show. Still, any increase in U.S. borrowing costs needs to take into account that central banks have cut rates about 600 times since 2008, Evolution Mining Ltd.’s Executive Chairman Jake Klein said Thursday in an interview with Bloomberg Television’s “Daybreak Asia”.

“In context, conditions are still favorable for gold,” Klein said. “I’m optimistic on the gold price, because we are in an environment where we have unprecedented low interest rates. It’s difficult to see rates rising a lot.”

Bullion’s rebound in 2016 from three annual declines and the scaling of a two-year high in July, have sparked new interest from investors in producers, according to Klein, who said in August miners were being feted like rock stars and that he’d never had so many invitations to corporate or sporting events.

For the rest of this article, click here: http://www.bloomberg.com/news/articles/2016-10-06/fed-hike-shouldn-t-shake-investor-faith-in-gold-says-mine-chief