Gold's a buy if the Fed hikes

UAE's largest lender is advising clients to buy the dips in gold

Gary Dugan at Emirates NBD, UAE's largest lender says gold could rally to $1400 short term and then to $1800 by the end of 2017 as a premature Fed hike may cause a fall in inflation and growth to slow.

Speaking to Bloomberg he advises that clients should hold up to 10% of their portfolios in gold and buy the recent dips.

If the Fed then has to backtrack on hikes investors faith in the dollar will be eroded, which will buoy gold.

"If we give up on central bankers, there will be a kind of loss of hope. People will be saying 'Well if you're maybe increasing rates then cutting them back again, which is what's happening in every other part of the world, then you'll be in gold'."

I think one of the big reasons that the Fed hasn't hiked again is the precarious nature of the economy. They used the economy (and continue to do so) as the excuse for the first hike but the real reason was to get rates off of zero.