, Columnist
This Gold Rally Has Recent History on Its Side
It's advisable to trade in and out of gold during the Fed's cat-and-mouse game.
Gold back in demand.
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Gold has staged an impressive rebound since the Federal Reserve raised interest rates last week and reiterated that the pace of increases will accelerate. But is a rally logical?
Some would argue that higher rates portend faster inflation and that gold is a good hedge against inflation, thus validating a long gold position. On the flip side, post-rate hike rallies in gold can be seen as counter-intuitive for two reasons, the first being that the precious metal doesn't generate a yield. Warren Buffett once said during one of his Berkshire Hathaway annual meetings that if you owned all gold in the world, "you could climb on top of it, fondle it, and declare yourself king, but you couldn’t earn anything on it."