Policy makers in the US continue to look for an excuse to keep interest rates low, and that should send the gold price higher from here, according to Nitesh Shah, analyst at ETF Securities.

US interest rates rise in December, but remain at near record low levels. When they last rose, the market expectation was for as many as four further interest rate rises this year.

The uncertainty that has wrapped itself around the global economy almost since the first day of 2016 has reset those rate expectations.

US interest rate movements matter to the gold price because when rates rise, the expectation is the dollar will gain in value. Because the dollar competes with the gold as a ‘safe haven’ asset’ class, when it rises in value, gold does less well.

A scenario where interest rates don’t rise as fast as markets expect causes investors to be more chary on the investment case for the dollar as a safe haven, and turn to gold instead.

Janet Yellen, chair of the US Federal Reserve recently said that interest rates would rise in the coming months, only for weaker than expected US jobs data to send markets back into a tizzy of disbelief.

Shah noted that the gold price has risen by about 4 per cent over the past couple of months. He continued, ‘It looks like the US Federal Reserve are behind the curve, like they have been looking for an excuse not to raise rates. The US non-farm payrolls {jobless figures} which came out this week were  not as good as expected, they were expecting 200,000 new jobs, and it came in at far less than that, which is an excuse not to raise rates.’

He concluded his comments with the remark that, ‘history shows that when the US Federal Reserve doesn’t raise rates as quickly as it might, it is good for the price of gold.’

On commodities more generally, Shah remarked, ‘it has been a choppy ride for investors, but commodities have actually outperformed most asset classes this year to date.’ He believes that the full impacts of the recent curtailment in oil production hasn’t fed into oil prices.