Gold prices have risen for five days straight as investors speculate on the strength of the US economy and the US dollar. Gold fell to a four-month low on March 17 as the US dollar made gains against a basket of currencies. The next day the Fed made its interest rate announcement, which has caused the dollar to fell after the Fed signalled a more dovish monetary policy. Despite the fact that the US dollar remains at relatively high levels, gold prices are now at their highest levels since March 5. "The dollar remains the main factor which is driving the gold price and traders will be looking very closely towards [Fed officials'] comments to gauge when and how rapid the rate hike will be," online broker AvaTrade chief market analyst Naeem Aslam said.
There has been some turbulence in the market as investors speculate that the interest rate will be increase sometime this year. Federal Reserve policymaker James Bullard mentioned recently that the first rate-hike would most likely happen sometime in the summer. Recent data from the US has shown that inflation has risen for the first time since October. Although inflation is generally good for gold, some investors are concerned that this positive data will prompt the Fed to raise interest rates earlier than expected. “There’s a lot of volatility in the currency markets since the Fed announcement last week, and that’s caused some uneasiness and given gold a lift,” said Bob Haberkorn, a broker with RJO Futures in Chicago. Gold has been trending upward since March 18 and is currently floating around $US1,190.
Author: Simon Herrmann
Mar 25, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.