Gold was hovering around the $1250 and $1260 range; IT took off over $1260 over news doing round in the markets that the U.S Fed would be taking a more ‘dovish’ stance on current and future interest rate hike at the December FOMC meeting.
A “dovish hike” occurs when a central bank raises rates but hints that future such moves will be limited. But this was short lived as gold dropped $20 reaching the low of $1240 an ounce despite the belief that the Fed would be taking a more ‘dovish’ view on the forthcoming interest rate hikes.
Equities were doing well until; a statement released by Powell which ended the splurge and the major U.S indexes fell sharply on 19th December.
Dow- closed down another 350 points
S&P- off 39 points
NASDAQ –down 147 points.
These downfalls benefited gold. Another fact that supported the precious metals were the numbers that came in from GLD, the world’s largest gold ETF. Around 8 tonnes of golf was deposited bringing the total holding to a highest level of 4 months at 771.79 tonnes.
On analysis the statement following the latest FOMC meeting, and Fed Chair Powell’s subsequent comments, were perhaps less ‘dovish’ than the markets had hoped, particularly following President Trump’s plea not to raise rates. The Fed was pointing to two interest rate rises next year, instead of three as previously forecast, but U.S. data - and particularly equity performance, could lead to a change of plan at one of the next FOMC meetings - due on January 29-30 and March 20-21.
Perhaps one could expect changes in the Fed’s leadership in the New Year, or before, under pressure from President Trump if he sees the independent body as thwarting his ideas on the U.S. position on world trade.
Trade war, US equities, geopolitical crisis, Euro zone and some more factors will have a visible impact on gold. We thus await some concrete news before the markets break for a holiday mood and before the year ends.
But overall things are looking positive for gold and the other precious metals - at least for now hopefully!
A “dovish hike” occurs when a central bank raises rates but hints that future such moves will be limited. But this was short lived as gold dropped $20 reaching the low of $1240 an ounce despite the belief that the Fed would be taking a more ‘dovish’ view on the forthcoming interest rate hikes.
Equities were doing well until; a statement released by Powell which ended the splurge and the major U.S indexes fell sharply on 19th December.
Dow- closed down another 350 points
S&P- off 39 points
NASDAQ –down 147 points.
These downfalls benefited gold. Another fact that supported the precious metals were the numbers that came in from GLD, the world’s largest gold ETF. Around 8 tonnes of golf was deposited bringing the total holding to a highest level of 4 months at 771.79 tonnes.
On analysis the statement following the latest FOMC meeting, and Fed Chair Powell’s subsequent comments, were perhaps less ‘dovish’ than the markets had hoped, particularly following President Trump’s plea not to raise rates. The Fed was pointing to two interest rate rises next year, instead of three as previously forecast, but U.S. data - and particularly equity performance, could lead to a change of plan at one of the next FOMC meetings - due on January 29-30 and March 20-21.
Perhaps one could expect changes in the Fed’s leadership in the New Year, or before, under pressure from President Trump if he sees the independent body as thwarting his ideas on the U.S. position on world trade.
Trade war, US equities, geopolitical crisis, Euro zone and some more factors will have a visible impact on gold. We thus await some concrete news before the markets break for a holiday mood and before the year ends.
But overall things are looking positive for gold and the other precious metals - at least for now hopefully!
