Gold Outlook: Do Not See Fed Interest Rate Increase in 2016

Gold Outlook: Do Not See Fed Interest Rate Increase in 2016

Gold Outlook: Do Not See Fed Interest Rate Increase in 2016


A US Fed interest-rate increase this year should not shake investors’ faith in Gold, according to Australia’s 2nd-largest producer.

Bullion is trading near the lowest level in more than 3 months. Prices fell on speculative worries that central banks are ready to curb stimulus and that the Fed may be set to raise interest rates in December for the 1st time in 12 months as the economy improves, but the economy is not improving as indicated by Friday’s US jobs situation report.

Any increase in US borrowing costs must take into account that central banks have cut rates about 600X since Y 2008, Evolution Mining Ltd.’s (ASX:EVN) Executive Chairman Jake Klein said Thursday in an interview.

 “In context, conditions are still favorable for Gold,” Mr. Klein said. “I’m optimistic on the Gold price, because we are in an environment where we have unprecedented low interest rates. It’s difficult to see rates rising a lot.”

Bullion’s rebound in Y 2016 from 3 annual declines and the scaling of a 2-year high in July, have sparked new interest from investors in producers, according to Mr. Klein, who said in August miners were being feted like rock stars and that he had never had so many invitations to corporate or sporting events.

Sydney-based Evolution fell 4.3% to A$2.23 in local trading Thursday, trimming its advance this year to 63%.

“The price is still up almost 20 percent this year, so from a gold miners’ perspective, we’ve still got to be happy” even with the decline this week, Mr. Klein said.

Forecasters are split on the future for the precious Yellow metal.


Evolution in August announced a US$669-M deal to acquire both a stake in and future output from Glencore Plc’s Ernest Henry operation in Queensland, and is continuing to review opportunities to improve the quality of its portfolio and lower costs.

Deal-making in the industry in the Quarter to 30 September was the busiest since Y 2010 by transaction volume, according to the data.

Evolution is budgeting as though the Gold price was about A$1,500 oz.

“We are running the business for conditions that could get more challenging, but we are certainly confident and hopeful that we’ll continue to generate significant returns,” Mr. Klein said.

Have a terrific weekend


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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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