Gold News: Gold Experiences Sharp Drop Following Fed Comments

Gold News

In the latest gold news: As of March 05 at approximately 1:12pm EST, gold was trading at $1318.94 per ounce, dipping significantly after higher prices last week. At approximately this time last week, gold was trading at $1330.51 per ounce.

gold news

After the semi-annual testimony of new Federal Reserve chair Jerome H. Powell on Tuesday, gold experienced a decline over the second half of last week. This was due to the hawkish comments by Powell, who indicated that the Federal Reserve would possibly go for three or more interest rate hikes during the year in order to prevent the the US economy from overheating. Powell stated, “We’ve seen some data that in my case will add some confidence to my view that inflation is moving up to target […] We’ve also seen continued strength around the globe. And we’ve seen fiscal policy become more stimulative”. Following Tuesday’s comments, the greenback has been experiencing an upward trend and looks to be moving even further. This is also accompanied by the increased probability from 19.6% to 26.6% of a fourth rate hike, up over the last month since the December 18 FOMC meeting. Since Thursday gold has recovered slightly, but it tested the support of $1300 last week.

Although there are some analysts that believe that there is the possibility that gold will dip below the support level of $1300, given the seeming rising strength of the dollar. However, on Friday, gold recovered slightly following the announcement by President Trump on Friday that there would be tariffs placed on steel and aluminum. This then led to fears of a trade war and worries over the return of robust inflation. Thus, investors put back some stake in gold as a safe haven investment, pushing the prices up slightly. Trump’s policy announcement that the US will implement a 25% tariff on steel imports and 10% tariff on aluminum imports set stocks reeling on the other hand, and the Dow lost 500 points approximately over two sessions. Moving forward, it is unclear whether gold will maintain this boost, but the price action in the short-term will be dictated by the direction of the US dollar and US equity prices. However, the higher interest rates need to be considered as well and these could limit the overall gains that gold could possibly make over time.

This sentiment has caused the bullion to reach up to its previous price points, at least for now. In the 14-day gold prediction ending January 02, I Know First’s algorithm based on a stock prediction algorithm showed an impressive 100% accuracy rate, as seen in “Gold Forecast Based on Algorithmic Trading: Returns up to 4.53% in 14 Days.” After a fortnight, I Know First’s average percent change came out to 4.53% with GLD as the top earner, bringing in an impressive 4.53% return to investors.

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