Gold Prices Soar on Federal Reserve Statement
Prices of precious metals soared in Asian trading this morning, with gold prices rallying from a 2-week low, as investors reacted to the Federal Reserve lowering their forecast for 2016, whilst halving the number of expected interest rate hikes this year.
Gold prices jumped 2.71%, or $33.30 to trade at $1263.10 an ounce, whilst Silver climbed 2.73% or $0.416 to trade at $15.635 an ounce as investors moved out of the US dollar and backed precious metals, with gold rebounding from the 2-week low reached earlier in the week.
Gold is a dollar priced commodity which means it normally trades inversely to the US Dollar. When the dollar falls in price, this makes the gold a cheaper and more attractive investment and vice versa, when the US Dollar strengthens, it makes buying gold and silver a more expensive and a less appealing option.
The raft of weak data releases from the US over the last few days, in particular the soft Retail sales data, coupled with inflationary fears, has raised concerns that the Federal Reserve raised interest rates too early in December and highlighted the fragility of the US economy, the world’s largest economy.
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