Since the beginning of this week and at today’s opening session, gold is traded down in anticipation of the outcome of 2-day meeting of the US Fed

At COMEX at the end of the trading day on Tuesday, April futures of gold fell by 1.1% to 1231 USD per ounce. Spot-price fell to 1233.00.

Today at 20:00 (GMT+2) the US Fed will announce interest rate decision and at 20:30 a press-conference will start, where the head of the US Fed Janet Yellen will give reasons for making interest rate decision and shed light on the future monetary policy of the Central Bank.

It is not expected that the interest rate will be raised at the meeting; however, the speech by Mrs. Yellen will serve as an indication of the further movement in the USD and situation in the global financial market. This event will have strong influence on the market and volatility is expected to rise.

Positive statements by Janet Yellen and confirmation that the US fed is going to continue monetary policy tightening will strengthen the USD and increases its attraction versus the safe-haven currencies such as the Yen and gold.

During the periods of rising in interest rate and strengthening in the USD investment attractiveness of gold is decreasing because of the rise in borrowing costs for its purchase and storage.

Strong economic data and good situation in the US labor market, as well as decline of turbulence in the financial markets can convince the US Fed to go ahead to the targets.

According to some assessment there is 48% of chances that interest rate will be increased by the US Fed in June and 78% of chance that the raise will take place in December.

If Mrs. Yellen drops a hint that interest rate will not be raised, the USD will fall, while gold will reach the highs and continue to rise.

Prior to the US fed decision and the speech by Janet Yellen, the pair XAU/USD is likely to stick to the current level of 1230.00 USD per ounce.

Materials published on this page are provided by LiteForex for informational purposes only and should not be construed as investment advice or advice for the purposes of 2004/39/EC Directive. In addition, these materials have not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the further distribution of investment research.

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