Federal Reserve monetary policy result as expected

The gold price held steady today as an expected result from the Federal Reserve policy did nothing to support the dollar. Spot gold was nearly unchanged at $1,261.31 at 00:49 GMT, reaching its highest since June 15 in the previous session. Meanwhile, gold futures almost rose a whole percentage point to $1,261.40.

The Federal Reserve held interest rates constant yesterday. The key clue in their statement with regard to the direction of their policy lay in the fact the winding down of bonds was to occur “relatively soon”. This points towards interest rate hikes later on in the year, which is what the markets expect.

“The weakness of the dollar is a key driver for gold and silver this year. While dollar-denominated prices are up 10% and 5% respectively, euro-denominated prices, for example, are down. Considering the solid growth backdrop in the United States and the outlook for rising interest rates, support from a weaker dollar to the precious metals should fade,” said Carsten Menke, Commodities Research Analyst at Julius Baer.

Republican Senate leaders, who are struggling to rally the party to repeal Obamacare, have instead switched strategy by “slimming down” their proposals and passing on the policy to the House of Representatives. Washington gridlock has been a thorn in the side for American markets and the dollar ever since president Donald Trump took office.  

The political sphere is also facing fresh uncertainty after Russia displayed some diplomatic clout, threatening retaliation against the US after the House of Representatives backed sanctions on Moscow.

In the East, North Korea could be preparing for another missile test within days, according to US officials. The fear is that North Korea’s ever-increasing missile range will be able to reach the US.

PhotoImages Money, licensed under CC BY 2.0.


Link to this article: : http://www.goldmadesimplenews.com/gold/federal-reserve-monetary-policy-result-as-expected-13298/

Posted by on Jul 27 2017. Filed under Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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