Fed Applies Hawkish Shock Treatment

Gold had a closing high of $1,848 just before the January FOMC meeting, but slipped at month end following the Fed's exceptionally hawkish statements. Despite this, gold has been gaining strength as a safe haven asset as it decouples from rising real yields and higher rate expectations. We believe that we are in the early stages of rising market risks and gold, as it did in 2018, is likely to stage a breakout in response.