3 May, 2018
Gold is now trading higher for a 2nd straight day following on from Yesterday’s interest rate decision from the Federal Reserve and some say the following monetary statement that was delivered may help the precious metal in the foreseeable future.
As expected the Fed kept rates on hold but in the following speech noted that further rate hikes would be needed to accommodate monetary policy on the back of rising inflation with is now flirting with the lower band of the Fed’s target range of between 2 and 3 percent.
In contrast to previous statements, the central bank didn’t seem overly concerned the inflation may quickly enter their target range which led some to speculate they may let inflation push higher than first thought which is likely to benefit gold which thrives in an environment of rising inflation.
“The Fed’s decision is showing us that the Fed is willing to let its inflation overshoot its 2% target and accommodate growth,” said Peter Spina, president and chief executive officer of GoldSeek.com.
“This should be favorable to growing inflation forecasts and make the appeal of gold grow.” He added.
Next week US President Donald Trump is to decided whether to restore sanctions against Iran for failure to live up to their end of the deal on dismantling the nuclear weapons program which the President sees as a deal that should have never been signed.
Should this happen, gold is likely to benefit as the government of Iran are unlikely to take the news lightly and their response will probably cause political tension and open up gold as a safe haven again.
“Volatility is starting to pick up. These issues will become a much more important driver of gold price, which is what we’ll be focusing on in the short term,” said Daniel Hynes, a senior commodity strategist from ANZ
“Rising global tensions would be quite supportive for safe-haven buying." he added.
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