Strengthening Dollar, Upcoming Fed Policy Announce
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Posted On: 11/14/2024 4:50:42 PM
Strengthening Dollar, Upcoming Fed Policy Announcement Cause Gold price to Slide
The start of the week saw the price of gold drop by over 2% as the dollar continued to rise. U.S. gold futures fell 2.9% to $2617.70 while spot gold settled 2.5% lower at $2617.96 an ounce. This decline follows Donald Trump’s victory in the recently concluded U.S. presidential election, which experts expect will influence interest rate cuts and fiscal policy.
Following the announcement of his victory, the dollar index which had already surged 0.5% to reach its highest level in months, rose by over 1.5% to 105.44.
Bullion also recorded its worst week in more than 5 months following this win. TD Securities’ commodity strategist Daniel Ghali states that the attention of the market has shifted to the second-order effect since the announcement and the GOP gaining control of both the House and the Senate.
Tastytrade president and CEO JJ Kinahan explains that most of Trump’s policies are expected to support stocks, which means markets may respond well to a GOP majority. Ghali adds that the likelihood of tariffs being imposed early into the new administration and the strong demand for the dollar is burdening the price of gold.
He notes that the dollar’s performance is also linked to increasing expectations that the Central Bank may delay its easing cycle. Trump’s win also gives rise to new uncertainties for the Federal Reserve as it considers decreases in interest rates now that inflation is closing in on the 2% target.
Last week, the Federal Reserve reduced the benchmark rate by one-quarter of a percentage point to a 4.5% to 4.75% range. Traders believe there’s a 65% chance of a twenty-five-basis point reduction in interest rates come December. This is about 15% lower than expectations prior to Trump’s win.
Federal Reserve officials, including Chair Jerome Powell, are expected to hold a meeting this week. Additionally, U.S. retail sales figures, weekly jobless claims, and producer and consumer price index data will also be released this week.
In other news, spot silver saw its price drop to $30.60 an ounce, representing a 2.2% decrease. In a note, Heraeus analysts explained that the increasing use of N-type cells and growth in installations may likely keep the demand for this metal strong this year. This is despite efforts to reduce its use and replace it with cheaper metals.
Palladium also saw its price decline to $979.96, a 0.9% drop. Similar to palladium and silver, the price of platinum reduced to $961.55, a 0.7% decline.
Entities like GEMXX Corp. (OTC: GEMZ) that have been operating in the gold industry for long are unlikely to be fazed by this dip in price since such corrections are a normal part of the way commodity markets behave.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
The start of the week saw the price of gold drop by over 2% as the dollar continued to rise. U.S. gold futures fell 2.9% to $2617.70 while spot gold settled 2.5% lower at $2617.96 an ounce. This decline follows Donald Trump’s victory in the recently concluded U.S. presidential election, which experts expect will influence interest rate cuts and fiscal policy.
Following the announcement of his victory, the dollar index which had already surged 0.5% to reach its highest level in months, rose by over 1.5% to 105.44.
Bullion also recorded its worst week in more than 5 months following this win. TD Securities’ commodity strategist Daniel Ghali states that the attention of the market has shifted to the second-order effect since the announcement and the GOP gaining control of both the House and the Senate.
Tastytrade president and CEO JJ Kinahan explains that most of Trump’s policies are expected to support stocks, which means markets may respond well to a GOP majority. Ghali adds that the likelihood of tariffs being imposed early into the new administration and the strong demand for the dollar is burdening the price of gold.
He notes that the dollar’s performance is also linked to increasing expectations that the Central Bank may delay its easing cycle. Trump’s win also gives rise to new uncertainties for the Federal Reserve as it considers decreases in interest rates now that inflation is closing in on the 2% target.
Last week, the Federal Reserve reduced the benchmark rate by one-quarter of a percentage point to a 4.5% to 4.75% range. Traders believe there’s a 65% chance of a twenty-five-basis point reduction in interest rates come December. This is about 15% lower than expectations prior to Trump’s win.
Federal Reserve officials, including Chair Jerome Powell, are expected to hold a meeting this week. Additionally, U.S. retail sales figures, weekly jobless claims, and producer and consumer price index data will also be released this week.
In other news, spot silver saw its price drop to $30.60 an ounce, representing a 2.2% decrease. In a note, Heraeus analysts explained that the increasing use of N-type cells and growth in installations may likely keep the demand for this metal strong this year. This is despite efforts to reduce its use and replace it with cheaper metals.
Palladium also saw its price decline to $979.96, a 0.9% drop. Similar to palladium and silver, the price of platinum reduced to $961.55, a 0.7% decline.
Entities like GEMXX Corp. (OTC: GEMZ) that have been operating in the gold industry for long are unlikely to be fazed by this dip in price since such corrections are a normal part of the way commodity markets behave.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
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