Gold continues its descent following what many interpreted as a hawkish shift from the Fed. We have written extensively on our top-down view on gold in recent reports and continue to hold that view today.
Mohamed El-Erian, top economist and Allianz chief economic advisor, has previously been spot on with his projections. He said on CNBC this week that he expects the Fed to leave rates unchanged for the remainder of this year, and that the recent correction in oil prices would likely have shifted the tone of the Fed’s last meeting had it been factored in. This contrasts with current market pricing, which still implies close to two rate hikes this year.
At time of writing, vs its January peak, gold is trading close to the midpoint between the medians of the worst peak-to-trough corrections over the last 30 years and
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