“The risks are clearly skewed to the downside in this environment,” he told Bloomberg in a telephone interview on Tuesday. “There is a probability that the market trades below US$1,000 this year given our broader commodity view.” (Source: Goldman Sachs: This Could Send Gold Prices Below $1,000, July 22, 2015.)
A rising interest rate diminishes the appeal for precious metals which typically rewards its holders thorough price gain and encourages investors towards the greenback.
“With the more positive outlook on the dollar and with debasement risk starting to fade, the demand to use gold as a diversifying asset against the U.S. dollar becomes less and less important,” said Currie.
Meanwhile, the Chinese economy is slowing down faster than expected. Turmoil in the second-largest economy in the world could have some significant negative impact on precious metals; among which is gold. Weak demand from the world’s top consumers of gold would drag down gold prices further.
All told, investors are anticipating that gold would protect them from the reckless monetary policy that could lead to turmoil in the global economy, which could be bullish for gold.