Gold Prices Rise Following Fed Meeting
Gold prices have hit $1,233 an ounce and continue to see gains as the U.S. Federal Reserve’s announcement last week has driven investors to expect fewer interest rate hikes than first anticipated.
After having passed the gold price per ounce, Bitcoin was being touted as the next go-to hedge asset by some online currency bulls as gold has suffered since the election of U.S. President Donald Trump, and the U.S. economy has appeared strong. But gold has now made gains in consecutive sessions following the Fed’s move.
Gold prices had been suffering in the lead-up to the Fed meeting, with expectations high that multiple interest rate hikes were incoming. Instead, the Fed struck a dovish tone and announced a modest rise of a quarter of a percent, to a range of 0.75% to one percent.
The U.S. dollar has also taken a hit since the Fed meeting last week. Gold bullion is often used as a hedge against inflation and value drops in the Greenback. The commodity also shares an inverse relationship with interest rates in the United States. Interest rate hikes often help increase the value of the dollar and bonds, and hurt the non-return-yielding bullion.
Political instability in Europe and increased demand in China and India could also continue to push the precious metal higher in coming weeks. (Source: “Gold prices to rise further on Fed’s dovish outlook and European uncertainties, analysts say,” CNBC, March 20, 2017.)
With the French and German federal elections approaching, gains by populist anti-Euro parties could send investors flocking once more to gold.