The price of gold is caught between two opposing forces
GOLD
Gold prices are trading almost flat as the European session gets underway. The price of the precious metal is caught between two opposing forces. On one hand, there is support arising from growing anxiety over the US regional banking crisis, which caused a drop in risk appetite and fuelled demand for haven assets. On the other hand, this upside has been capped by uncertainty over the Federal Reserve’s stance on interest rates, with some investors unsure on how the central bank will behave after today’s decision. A scenario where the Fed announces a pause after today’s expected 25 basis points hike and hints at the possibility of a cut before year-end, could penalise treasury yields and the dollar, offering further support to gold prices. However, further hawkish posturing from Jerome Powell and Co. would be likely to strengthen the dollar, with a corresponding fall in the price of the precious metal.
Ricardo Evangelista – Senior Analyst, ActivTrades
Gold prices are trading almost flat as the European session gets underway. The price of the precious metal is caught between two opposing forces. On one hand, there is support arising from growing anxiety over the US regional banking crisis, which caused a drop in risk appetite and fuelled demand for haven assets. On the other hand, this upside has been capped by uncertainty over the Federal Reserve’s stance on interest rates, with some investors unsure on how the central bank will behave after today’s decision. A scenario where the Fed announces a pause after today’s expected 25 basis points hike and hints at the possibility of a cut before year-end, could penalise treasury yields and the dollar, offering further support to gold prices. However, further hawkish posturing from Jerome Powell and Co. would be likely to strengthen the dollar, with a corresponding fall in the price of the precious metal.
Ricardo Evangelista – Senior Analyst, ActivTrades