Gold seems to have fallen out of favor with investors as US Federal Reserve Chair Janet Yellen is expected to raise rates at its next policy meeting in September on the back of an improving American economy, boosting the dollar.
In his interview with the German business magazine WirtschaftsWoche Heute, he explained that the gold has already hit a low and the expected announcement will not change much.
“Fear of the turnaround in interest rates has already pushed the price. If the Fed does what everyone expects, then that has no more effect on the gold price,” he said.
However, he suggested that if the Fed holds off on raising interest rates, the price of gold will immediately go up.
The analyst also suggested that the beginning of a tightening rate cycle is usually the lowest point for the gold price.
The current sell-off of gold is “exaggerated”, the analyst says. He's also suggested that euro-based investors should hold onto gold rather than selling it.
“Gold promises more stability than the paper currency Euro. Thanks to the loose monetary policy of the European Central Bank, the euro is likely to mutate into a weak currency. This suggests [one should] hold gold instead of selling it. In the long term, the price of gold, calculated in euros, will rise,” he said.
He also noted that the central banks of the western countries have practically not been buying gold, while China, Russia, India and Turkey have been buying hundreds of tons each year, and see it as at an important means of diversifying their assets.