Gold edges higher as U.S dollar weakens despite of the rate hike

The gold bulls are controlling the market from the very beginning of the year 2017.The initial bullish rally in the gold market was started prior to year closing of 2016.The dollar gained a strong bullish momentum in the global market during the U.S presidential election held on 8th November 2016.After Mr. Trump become the U.S president he stated that they are going to increase the fiscal spending and initiate tax cut policy in the government. This gave the dollar a strong bullish momentum in the global market but the market absorbed all of the bullish strength prior to the year closing as Mr. Trump failed to keep his promise. During that time the professional gold buyers in the global market made a decent profit by riding the decent bullish rally in the gold market. In the last Friday, the FED hike their interest rate on the basis of 25 points yet the dollar dropped against most of its major rivals in the global economy. Since the price of gold is measured in U.S dollar a slight variation in the strength of the green bucks significantly affects the gold market. During that event, the price of gold rallied higher in the global market but upside momentum was capped by Mr. Trump statement after the U.S interest rate hike.

Gold market struggles: The price of gold traded higher in the global market in the last week after the dollar lost its ground due to FED dovish rate hike. The price of yellow metal rallied higher for the first time since February and most of the leading investors are cautiously waiting for the upcoming week since a week U.S dollar will create a decent bullish rally in the gold market. The price gold secured a high of $1231.45 in the last week but faced slight bearish pressure prior to the market closing as Mr. Trump gave the dollar bulls some hope in his speech. According to the Comex division of the New York Mercantile Exchange the price of gold gained near about 0.13 percent in the global economy and traded at $1228.75 an ounce and this is the first gain of the precious metal for the month of March. The price of silver gained near about 0.4 percent and traded at $17.398 a troy ounce in the global market. To be precise the precise metal market rallied higher in the market after the U.S dollar index fell in the global market.

Gold vs. US rate hike: Since the price of gold is measured in a dollar a small variation in the U.S interest rate decision significantly affect the gold market. In the month of December 2016, FED chairperson Janet Yellen stated that they are going to hike their interest rate for at least three times in the global economy and this gave the dollar a strong platform. In the last week, the FED hike their interest rate on the basis of 25 points but FED chairperson came up with a dovish statement which pushed the dollar lower against most of its major rivals in the global economy. During that event, the gold bulls pushed the market higher in the global economy. However most of the conservative gold traders are still on the sideline since the dollar remains broadly supported fundamental in the global economy since they will go for another two rate hike in the year 2017.Most importantly the U.S central bank will also pressurize the FED for another rate hike very soon to readjust their current inflation rate. If the second rate hike in this year comes up with a hawkish statement from FE chairperson Janet Yellen then we will see a sharp fall in the gold market.

The possible scenario of the Gold market: The price of gold is currently heading towards a critical resistance level in the market. In the last week, the gold bulls gained some bullish momentum in the global market. The starting of the week is mostly likely to be for the gold bulls since there is no important major news release in the U.S economy. Since the last week closed with bearish tone, the green bucks are most likely to face bearish pressure in the upcoming week. If the bearish pressure continues in the market than we are most likely to see slight bullish move in the early part of this trading week. However, in Thursday, the U.S unemployment data will be released and most of the leading gold investors will be cautiously observing that data since a weak data will weaken the U.S dollar furthermore and push the price of gold higher in the market. According to the leading commodity researchers, the gold market is most likely to push higher in the global market regardless of the U.S rate hike decision since the current consumer sentiment of U.S economy is negative. But if Mr. Trump comes up with another dramatic speech than we might see a reverse scenario in the market.

Summary: In the last week the price of gold edged higher in the global market as the U.S dollar lost its bullish momentum after the rate hike followed by a dovish statement from FED chair Person Janet Yellen. The price of gold might exhibit sideways movement with the bullish tone in the early part of this trading week however upon the news release of U.S unemployment claim the traders might find a clear clue about the next movement of the gold market.

 

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