Anticipated Fed Interest Rate Cut Could Help Gold Price

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National Bank Financial metals analyst Tanya Jakucsonek and associates Farooq Hamed and Joanne van Ballegooie assert that continued investment demand through gold ETFs and speculative positions will also drive demand for gold.

National Bank Financial recently suggested that lower U.S. interest rates will "continue to weigh the greenback down and that in conjunction with the high oil price will continue to keep the gold price elevated."

In addition, metals analyst Tanya Jakucsonek and associates Farooq Hamed and Joanne van Ballegooie assert that continued investment demand through gold ETFs and speculative positions will also drive demand for gold.

With the gold price hovering near the $800/oz mark, NBF expects to see gold ETF holdings continue to grow as the fourth quarter closes out. Noting that ETF holdings have continued to maintain the gold demand pressure, NBF said central bank sales have not kept the same pace in the fourth quarter as they had in the previous quarter. "These conditions along with another expected Fed rate cut in December could be enough of a catalyst to see gold maintain its lofty position through the end of the year."

NBF analysts expect gold stocks to perform well this quarter, but analysts still maintain that "identifying companies with short to medium-term production growth, low operating costs (hence margin expansion), good exploration programs adding to reserves and resources and growing net asset values (NAVs) will be a strong strategy." The analysts favor Goldcorp "for its quality development projects and low cash costs."

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