Gold is within striking distance of the $1324, trading at fresh eight-month highs on Thursday. The yellow metal is on the rise for a fifth day in a row already. Much of the gains are due to dollar weakness that intensified flowing the FOMC meeting. Powell expressed a more dovish tone and confirmed the central bank’s intention to pause hiking rates.
The increasing political and economic risks make the Federal Reserve take a more cautious approach to monetary policy which is positive for the precious metal due to lower US Treasury yields and the dollar.
Probably, a more important message from the Fed was that the monetary authorities could end their efforts to reduce the portfolio sooner than expected. The decision on rates and the balance will depend on the incoming economic data, so both the buck and the bullion are going to be more sensitive to signals from the US economy in the month to come.
Further on, the key focus will be on Friday’s US monthly jobs report. Should the wages and employment numbers come in lower than expected, the selling pressure on the USD could send gold prices to fresh highs. On the other hand, after a spectacular rally, there is a risk of some profit taking ahead of the weekend.
The increasing political and economic risks make the Federal Reserve take a more cautious approach to monetary policy which is positive for the precious metal due to lower US Treasury yields and the dollar.
Probably, a more important message from the Fed was that the monetary authorities could end their efforts to reduce the portfolio sooner than expected. The decision on rates and the balance will depend on the incoming economic data, so both the buck and the bullion are going to be more sensitive to signals from the US economy in the month to come.
Further on, the key focus will be on Friday’s US monthly jobs report. Should the wages and employment numbers come in lower than expected, the selling pressure on the USD could send gold prices to fresh highs. On the other hand, after a spectacular rally, there is a risk of some profit taking ahead of the weekend.