The dollar eases as the gold prices rebound; gold prices regained some ground on Friday as a slight pullback in the dollar helped alleviate some pressure from the U.S. Federal Reserve’s hawkish policy narrative.
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What to expect from gold
Volatile but Profitable
What is the Fed’s perspective on interest rates?
What to expect from gold?
The Fed’s minutes from its March meeting, released on Thursday,
showed that policymakers were unanimous in their decision to raise rates and several members saw the need for additional rate hikes this year.
The strong data has bolstered expectations for another rate hike in June,
which would be the third this year.
The rise in gold prices came despite a strong rally in equity markets,
which have been boosted by robust corporate earnings and economic data of late. Gold is often seen as a safe haven asset during times of market turmoil or geopolitical uncertainty but has been under pressure recently as investor risk appetite remains high.
Looking ahead, gold prices may continue to see volatility as investors
digest more corporate earnings reports and await further clues on
monetary policy from central banks around the world.
The most recent data shows that gold is up 0.6%,
but this is still below the high of $1,700 per ounce that was seen just a few weeks ago.
While some believe that there may be more upside potential in gold prices,
others are concerned that the market could correct lower in the near term.
Either way, it looks like traders and investors will continue to closely
watch spot gold prices for any clues about where the market may be headed next.
Volatile but Profitable
Gold prices have been on a roller coaster ride in recent months,
testing the nerves of even the most experienced investors.
After reaching record highs in August, gold prices began to tumble,
and many experts believe that we are not out of the woods yet.
However, there are signs that gold may be beginning to stabilise.
Clifford Bennett, chief economist at ACY Securities believes that the
Fed’s recent interest rate hike and pledge to keep fighting inflation will help
to support gold prices in the short term.
Reuters technical analyst Wang Tao also believes that spot gold may bounce
back to $1,648 per ounce after breaking resistance at $1,632.
While it remains to be seen where gold prices will head next,
it is clear that they continue to be a volatile and risky investment.
However, for investors who are willing to take on some risk,
gold could still offer some profitable opportunities in the months ahead.
What is the Fed’s perspective on interest rates?
When it comes to investing in gold, there are pros and cons to consider.
On one hand, gold is often seen as a hedge against inflation.
This means that if the cost of living goes up, the value of your investment in gold should also go up.
However, on the other hand, high-interest rates can make it less attractive
to invest in gold since it doesn’t offer any yield itself. So what’s an investor to do?
It really depends on your individual goals and risk tolerance.
If you’re looking for stability and want to protect yourself against inflation,
then investing in gold may be a good option for you.
However, if you’re more interested in potential returns and are willing to take on more risk,
then there may be better options out there for you.
Ultimately, it’s important to do your own research and figure out what makes sense for you personally.
With the release of the U.S. non-farm payrolls data looming,
investors are closely watching for any clues on the Federal Reserve’s rate-hike stance.
A strong jobs report could reinforce the Fed’s hawkish posture and keep gold prices under pressure,
while a weaker report could provide some support for bullion.
The labour market is one of the most important indicators of economic health.
A strong labour market indicates that businesses are hiring and consumers have disposable income to spend.
The payroll data is closely watched by traders and investors because it provides a snapshot of the labour market.
A deceleration in job growth would be seen as a negative sign for the economy and could lead to lower interest rates.
This would be bullish for gold, as lower interest rates make gold more attractive as an investment.
However, if we see an upside surprise in the payroll data,
it would reinforce the Fed’s higher terminal rate posture and keep gold prices under pressure.