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In a deflationary world how likely is the US economy to strengthen, interest rates rise and gold prices fall?

by Peter Cooper, Arabian Money:

The Goldman Sachs’ argument about further falls in the gold price does have a fundamental flaw. The economic scenario it proposes it not very likely to happen, ergo gold prices are on the floor now and set to rise substantially in the very near future. What the bears at this house have argued about gold is quite simple, as they say: ‘We expect gold prices to come under significant downward pressure once the US economic recovery strengthens and the US Federal Reserve begins to raise interest rates.’

Deflationary world: OK but in a deflationary global economic environment how likely is it that the US will be able to keep its fragile economic recovery going let alone raise interest rates? This might have been a good story for 2014, if we forget the GDP slump of Q1 of course. But does it really stack up as a future scenario? Not if you think about it a bit.

Read More @ ArabianMoney.com

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