As a hedge against inflation, gold
gleams. But the stronger the dollar, the lower the price of gold tends to fall.
According to Bart Melek, the global head of commodity strategy at TD Securities in Toronto, investors and observers can expect to see the price of gold to climb as the dollar continues to weaken.
Since April 11, 2018 gold bullion lost about 5% in value, due to a surging dollar. Despite confusion in Italy and other uncertainties around the world, gold was selling for under $1300. Melek is predicting a surge in the price during the final quarter of 2018 to an average of $1375 an ounce, and could possibly hit a high price of $1400.
“As time moves on, there’ll be less and less reasons to get into the U.S. dollar, which will likely reverse some of the flows,” said Melek, a speaker at a precious metals conference in Singapore. “We do ultimately think that as we move into 2019, the U.S. dollar will weaken, which is a very powerful fuel for the gold complex.”
The outlook for the very near future is less optimistic for gold, whcich Melek does not believe will rise given the dollars continued strengthening. In addtion, the Fed is expected to raise interest rates two more times this year. Prices for gold will most likely average at about $1290 in the third quarter, and $1300 in the fourth quarter of 2018.