Gold Prices React To Greenback After Rate Hike Expectations Fades
Gold Prices React To Greenback After Rate Hike Expectations Fades
Gold prices might be feeling the impact of Federal Reserve chair Janet Yellen remarks. This is because, few days ago the prices of this precious asset started declining owing to the strengthening greenback. Gold prices are denominated in US currency something that makes them depend so much on the dollar.
When the dollar becomes stronger, commodities quoted in it becomes expensive and therefore undesirable. This at the end leads to investors not buying it which pulls the prices down.
The price of gold per ounce at 10.28 NY Time has gone up 0.08% to trade at 1,227.82. Spot gold price had a high of 1228.65 and a low of 1222.80. Gold prices might have escalated due to increased demand. Gold being a safe haven is bought when investors are not sure of the market situation.
A couple of weeks ago, investors stopped buying so called safe haven on a cue that the global economy is improving. This is after global stocks outlook showed some improvements.
Safe havens such as Japanese yen and gold were not bought in huge number at that time. This is because investors turned into currencies known to be more prone to risks such as US dollar.
Gold prices outlook in India
In India, wedding season is here but something is not right. This is because, Indian buyers have complaining that they are having problems securing gold supplies. The effect of the growing issue cannot be understood clearly right now but there is likelihood that this will boost gold prices in the coming days.
According to a report, local gold prices in India increased by Rs 402 to sell at Rs 49,554 per troy ounce. An increase of Rs 344 was recorded per 10 grams of gold. In the international markets, the situation was similar after prices shot by $19. The new price stands at $1236. This shows that all over the globe, gold prices are reacting to higher demand and also to a weaker dollar.
The dollar and gold prices
We have already talked about the impact of the dollar on gold prices. Federal chair Janet Yellen remarks on possible interest rate hike was cautious and did not seem to agree of the rate hike happening soon.
This made all expectations that an interest rate hike will take place as soon as next month fades away. As a result of this, the strength of the dollar had garnered due to the expectations started fading away leaving it weaker.
The material has been provided by FX News Call - Your Finance News Resources - www.fxnewscall.com - by Jaica Mulera
