3 Funds To Benefit From Gold's Resilience

Global economic slowdown and weakness in U.S. dollar propelled gold to a 10-month high on Feb 19. However, gold prices have wobbled since then, as has the U.S. dollar. As it stands, gold is currently priced at $1,285.23 an ounce.

Though volatile, investors speculate that the yellow metal will witness a decrease in value in the near term. However, such weakness, if any, is only momentary as global economic fluctuations and inflated equity valuations are likely to boost gains for gold in the long run. Therefore, investing in gold mutual funds at this point seems prudent.

Gold Will Remain Solid This Year

The impact of global economic and political dynamics over the past two years is largely expected to be felt in 2019. There has been an increase in adoption of protectionist trade and economic policies by major economies across the globe. Needless to say, such practices contribute to an increase in volatility in the markets.

On Jan 21, the International Monetary Fund (IMF) reduced its global economic growth forecast for 2019 to 3.5% from 3.7% last October. Likewise, global growth projection for 2020 was reduced to 3.6% from 3.7%, marking the second reduction in the last three months.

Further, equity valuations remain stretched across the world. Such factors point toward a global recession this year. Therefore, there will be a surge in demand for gold in 2019 as a hedge against global financial risks.

Fed to Take a Slow Rate Hike Approach in 2019

Experts are of the view that the yellow metal faces severe headwinds from higher interest rates and strength in the greenback. However, the Fed has indicated a more controlled approach toward hiking interest rates this year, which means that gold will surge in the near term. 

Minutes from the Federal Open Market Committee’s meeting held in January were released on Wednesday. Minutes showed that officials from the Fed remained divided on their view of hiking interest rates. A group of officials argued that a hike in interest rates would only be necessary if inflation levels turned out to be higher than the initial baseline forecast.

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