US Fed revives gold market

By 14/04/2021News

Gold  1743,41

EURUSD   1,1961

DJIA  33567

OIL.WTI  60,655

DAX   15267,50

Last week the Federal Open Market Committee published the minutes of its last meeting in March. From the whole text, some points can be highlighted which will directly influence the gold price in the coming period.



All members of the committee noted the good economic indicators and became much more optimistic about the future improvement of the US economy. But they also pointed out a very important thing. Despite all the progress, Fed officials consider the current economic situation to be unsatisfactory and quite a few economic indicators are still far from the pre-pandemic level and the Fed’s long-term goals.
With these statements the Fed probably confirms that it is in no hurry to reduce quantitative stimulus and also that it has no plans to raise interest rates for several years. And just as importantly, the US Fed expects inflation to rise even more strongly. That is even more than their projected rate of 2.4% in 2021.
What does all this mean for gold? An increase in the actual rate of inflation combined with dovish Federal Reserve policy could create pressure on interest rates and the US dollar, supporting gold prices. Many market participants will hedge inflation risks by buying gold and other metals anyway.
After a terrible start to the year, the second quarter looks more optimistic for the gold market. A soft Fed policy creates conditions for long-term “weakness” of the US dollar, which will not immediately be reflected in the gold price, but could give a good long momentum after some time, but the decline of US Treasury yields is already giving good support to the yellow metal.

11.00 EU industrial production for February
16.00 Address by ECB President C. Lagarde
18.00 Address by US Federal Reserve Chairman J. Powell

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.