Gold prices could rise if the Federal Open Market Committee does not trim its bond-buying program as much as market consensus expects, said Bank of America Merrill Lynch Global Research.
According to the bank, expectations are that the Fed will taper its asset purchases, known as quantitative easing, by $10 billion to $15 billion. That view is priced into the market.
If the Fed is more dovish than that, i.e., tapers by less or delays tapering entirely, gold prices could rally in the short term. Yet, gains will in our view be limited, partially because real rates should continue trend higher in the coming quarters,” they concluded.
Source: Bullion Bulletin