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<\/figure>\n\n\n\nLower interest rates help gold several ways. First, they undercut the U.S. dollar, and precious metals tend to move inversely to the greenback. Lower rates also reduce gold\u2019s so-called \u201copportunity cost,\u201d which is the lost income from buying a non-yielding asset like gold, which does not pay interest income.<\/p>\n\n\n\n
Daniel Pavilonis, senior commodities broker with RJO Futures, cited yet another reason why Fed policymakers may become less aggressive with monetary tightening.<\/p>\n\n\n\n
\u201cWe saw such a stock-market correction that maybe the Fed will hold off raising rates for a while,\u201d he said.<\/p>\n\n\n\n
And that, he continued, could mean more inflation than would otherwise occur. Gold is often bought by investors as an inflation hedge.<\/p>\n\n\n\n
Pavilonis listed the area from $1,300 to $1,307 as the next key upside chart resistance for gold, commenting that the metal could accelerate to the upside if it breaks though here.<\/p>\n\n\n\n
By Allen Sykora<\/p>\n\n\n\n
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