Analysts are speculating a possible halt with gold’s expected 5-week rally after Federal Reserve Chair Janet Yellen’s talks about gradually increasing the U.S. interest rates. Gold and spot gold seized their on-going roll, and both saw diminishing numbers after a month.
Gold fell 1.1 percent last Wednesday after seeing an entire month of positive gains, while spot gold continues to shatter down, touching a low of $1,197.3 an ounce before holding a bit of ground at 1116 GMT to $1,202.75 and still sees a continues 0.1 percent decrease today. According to ICBC Standard Bank’s Tom Kendall, “Some people will have been short and are maybe taking profit on those positions. Other perhaps see (sic) a dip below $1,200 as an opportunity to buy,”
Yellen Pushes For Faster Interest Hikes
The Fed advocates to gradually increase interest hikes for more or less than three times this year, and a few more times until 2019. Yellen talks on about U.S. and how it is risking a “nasty surprise” if it waited and prolonged the raise in the rates. According to INTL FCStone analyst Edward Meir, Fed’s Chair’s speech was interpreted as a one-way ticket down for gold and that other metals are at a high risk of a slump after Yellen talks about on the topic of U.S. monetary policy, which is expected to be this Thursday.
Meir also said that, “We would view any short-term weakness as a buying opportunity in gold given that we do not think the Fed will be pushing the higher rate trajectory story so aggressively over the short-term,” and ending with “The Fed would want to first wait and see what kind of fiscal policies Donald Trump formulates and sends to Congress.”
The Fed’s decision is amongst other countries’ central bank’s decision; the Bank of Japan also launched a policy framework for keeping yield on the benchmark 10-year government bond around zero. On the other hand, European Central Bank is closely observed in keeping its asset-purchase program intact when its policy setters meet.
Dollar Falls, Metals Expect to Follow
On the other hand, the dollar index fell as much as 0.1 percent after the dollar struggles against the yen while continually gaining the upper hand against the majority of European currencies. But higher greenback spells a demand cut for dollar–priced metal from buyers holding other currencies.
While U.S. consumer prices increased in December, gasoline and rental accommodation were drawn in the spotlight as household paid more for the two. This eventually led to the highest year-on-year increase in 2 and a half years and signaling the inflation pressure it could be building.
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