The US Fed decision not to raise interest rate in March caused the rise in spot-price of gold by 30 USD per ounce up to the level of 1262.00.

However, despite the decline in the USD on the next day after the meeting, the pair XAU/USD fell below the closing level of Wednesday when interest rate decision was taken by the US Fed.

With the opening of today’s trading day the pair XAU/USD continue to decline.

The movement in the pair XAU/USD can indicate that the price of gold has reached important resistance level and the pair lacks drivers of the further rise.

Although the US Fed decided not to increase interest rate and lowered forecast of the further rise in the interest rate until the end of 2018, the US Fed is planning to raise interest rate twice this year from the current level of 0.5% to 0.875%.

Next decision by the US fed will depend on the economic state and conditions on the labor market in the USA. It is expected that GDP growth in 2016 will amount to 2.2%, by 0.2% less than expected in December; in 2017: 2.1% which is by 0.1% less than expected earlier. At the same time, the forecast of unemployment rate is optimistic. It is expected that unemployment will fall from the current level of 4.9%.

The head of the US Fed Janet Yellen does not exclude that the rise in the interest rate might take place at the meeting in April.

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

The price of gold will be supported by economic and political instability and increasing turbulence in the financial markets. Concern about slowdown of the world economy and increased volatility has been expressed in the comments of the US Fed.

Today the pair can maintain the level of 1250.00 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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