26 April 2016

Gold prices rose on Monday, pushed higher by a modest selloff in global equity markets, coupled with a retreat in the dollar, particularly against the yen. We think that gold will likely remain resilient through Wednesday, as markets begin to focus on the Fed policy announcement. Investors are unsure how dovish the Fed’s wording will be, but our take is that there will not be any meaningful change in the statement, leaving expectations of a “deferred” rate increase pretty much intact. Gold should benefit from such wording, although gains could be capped by a simultaneous rally in US equities. We’ll have to wait and see what happens.