Gold price has minor setback from Fed news, China expanding production
The gold price took a slight downward turn today as the possibility of a March rate hike by the Federal Reserve looked to increase. The gold price for April delivery GCJ7, -0.67% fell $8, or 0.5%, to $1,246 an ounce.
Marketwatch reported that San Francisco Fed president John Williams, addressing the Santa Cruz Chamber of Commerce last night, said an interest rate hike was “on the table for serious consideration”.
The Fed has been hinting at a rate hike for some time now, but has been vague enough that they will have plausible deniability if they choose not to. Janet Yellen has previously said that they would rather raise rates slowly over an extended period of time than cause more disruption with a sharper hike later down the the line.
Williams went on to say that the Fed could “handle shots from either side” as it is in a position of flexibility to “keep the economic expansion on sound footing”.
Marketwatch went on to report that the odds of a rate hike shot up to 70% after William Dudley, President of the New York Fed, said the case “is a lot more compelling”. The markets had previously put the chance of a rate hike at a mere 22.1%.
The market for gold still looks to be on a slightly bullish trajectory, with short blips in price in accordance with political and economic events followed by a price rally. Political uncertainty as Europe and the US readjust themselves is shoring up any potential bearishness caused by spot events.
Trumps’ speech to congress last night was overall received positively, but the markets have not responded so far.
In mining news mining.com reported that Xinhua, China’s official news agency, announced that the country is increasing its annual gold production to 500 tonnes. The Ministry of Industry and Information Technology (MIIT), expects gold output to rise 3% annually by 2020.
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