Fed interest rate cut 'would boost gold investment'

A senior figure at MKS Finance has explained today (December 15th) that investing in gold will increase if interest rates are cut in the US next week, Reuters reports.

The Federal Open Market Committee will announce its decision tomorrow after its two-day policy meeting, with many commentators expecting a decrease in the base rate.

Now Afshin Nabavi, head of trading for the firm in Geneva, has expressed his belief that gold investment will be given a huge boost if their predictions prove to be correct.

He told the news provider: "We have the Fed interest rate decision this week...which should be the last big event of the year.

"Everyone is banking on a lower interest rate in the US. If the dollar continues to lose value, of course it will benefit gold."

Commerzbank has added its weight to the opinion that rate cuts will prove to be beneficial for gold, especially with the prospect of deflation not as certain as it seemed a couple of weeks ago.

A note from Germany's second-largest bank read: "Generous rate cuts are good for gold as they again reduce the opportunity costs involved in holding it."

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