XAU/USD: The Price of Gold has been Growing for the Fifth Day. Fundamental analysis of 29.04.2016.
The price of gold has grown by almost 20% since the beginning of this year.
The events of this week caused the rise in price of the precious metals. At the end of trades in COMEX on Thursday June futures for gold has grown by на 1.3% up to 1266.40 USD per troy ounce. The price of gold started to rise at the beginning of this week in anticipation of the US Fed meeting and interest rate decision in the USA.
Since opening of the trading day today the price of gold has also grown for the fifth consecutive day. At the Asian session spot-price of gold has reached the annual highs at the level of 1280.00 USD per ounce.
According to the data provided by the US Ministry of Commerce on Thursday, GDP in Q1 rose by 0.5% (against the forecast of 0.7% and the rise of 0.9% in the previous quarter) showing the lowest result in two years.
The data released yesterday shows that the US Fed will gradually increase interest rates this year. It is known that on Wednesday the US Fed system decided to leave interest rate unchanged at the two-day meeting. In the comments the US Fed did not mention about possibility of the interest rate increase in June.
Low interest rates have a positive impact on the price of gold as it makes gold more competitive compared with the other low-risk assets, which bring interest, such as US Treasury bonds. The USD also fell against the major currencies and especially against the Yen after yesterday’s decision of the Bank of Japan to leave monetary policy unchanged. At the same time the WSJ dollar index fell by 1%. This index tracks the greenback against the basket of 16 major currencies.
The decline in the USD also has a positive effect on the gold, as the price of gold is expressed in the USD and weakening in the American currency makes gold more available for the holders of the other currencies.
Therefore, due to the developments of this week the price of gold has gained positive dynamics resuming the rise, which may continue until the next meeting of the US Fed on 14015 June. Attention of the market will be now focused on the data on NFPR, which will become known next Friday.