Fed May Keep Interest Rates Lower Longer Says IMF

  • Posted Wednesday, July 23, 2014 at 08:52 PM

TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Precious metals prices eased modestly on Wednesday as Gold dipped to $1,305.00 an ounce, while Silver edged a bit lower to $20.96 an ounce as the metals remain poised for a move higher on concerns that tensions between Ukraine-Russia and the Israelis and Palestinians will escalate, boosting demand for Gold as a safe-haven. Equities rose in Europe on Wednesday on stronger earnings despite growing investor concerns that a new round of European Union (EU) sanctions against Russia will be forthcoming over the downing of the Malaysian Jetliner last week.

“Tension between Ukraine and Russia is keeping prices supported,” said Blake Robben, of Archer Financial Services in a telephone interview. “We are seeing Gold’s haven premium rise.” According to the International Monetary Fund (IMF), the Fed may be able to keep interest rates near zero for longer than previously anticipated, which is bullish for Gold.

When it comes to precious metals, "I have argued again and again that investors should hold some assets in precious metals as an alternative to cash," says Marc Faber of the Gloom, Boom & Doom Report. With rates near zero and inflation on the rise, paper money isn't worth much, he added.

The IMF lowered its forecast for U.S. growth in 2014 to 1.7 percent from the 2 percent it predicted in June, saying the slowdown will prolong the recovery in the labor market. The IMF cites the contraction in the first quarter for its outlook, but left its 2015 forecast unchanged at 3 percent, which may be overly optimistic since it would be the fastest expansion since 2005. “Even with that relatively good growth outlook, we still see there’s a lot of slack in the economy,” said Nigel Chalk of the IMF, on Wednesday.

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