Fed Decision Should Please Gold Bugs

 | Jun 13, 2017 | 10:00 AM EDT
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Gold remains firmly trading above $1,260 as we approach the latest Federal Reserve decision on interest rates this week. The Fed is expected to raise rates by 25 basis points for the second time this year, but discussions on shrinking the balance sheet are also considered to be on the table for this two-day meeting ending Wednesday.

After each of the last two meetings where the Fed raised rates the price of gold rose significantly. We foresee much the same market reaction after the conclusion of this meeting.

After rallying to just below $1,300 last week, gold has retreated to the current $1,260 level. This is a normal and positive development as the precious metal consolidates recent gains and forms a base for the next rally. This next rally should begin after the Fed meeting and carry the yellow metal above the significant $1,300 resistance level.

With both technical and fundamentals remaining firmly positive, gold is setting up for a very exciting final two quarters for the year.

Global politics and monetary policies as well as significant debt issues and stretched equity valuations all scream for the necessity of a safe-haven store of value going forward. As more and more investors realize the value of wealth preservation the price of gold should steadily increase to match its underlying value.

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