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Gold price facing worst week in a month after Fed’s hawkish signal

admin by admin
December 16, 2022
in News


[Click here for an interactive chart of gold prices]

“A lot of traders are focusing on both the Fed and ECB, which signalled that more tightening is going to happen and we’ve seen global bond yields rise significantly, and that’s why gold is having a down week,” Edward Moya, senior analyst with OANDA, told Reuters.

On Wednesday, the Fed raised interest rates by 50 basis points as expected, but bullion fell as much as 0.8% after comments from Fed Chair Jerome Powell indicated that the US central bank will deliver more interest rate hikes next year despite growing recession worries.

The European Central Bank and the Bank of England also signalled a similar rate-hike strategy, further amplifying the selling pressure on gold, which bears no interest.

As for Friday’s price movement, gold was firmer on a corrective bounce from Thursday’s strong selling pressure after the Fed, Kitco Metals senior analyst Jim Wyckoff explained in a note.

“Gold may be getting a mild safe-haven bid as the US and global stock markets are selling off in the wake of still-hawkish major central banks,” Wyckoff added.

Commerzbank sees gold falling back towards $1,750 per ounce until it is clear that the Fed’s cycle of interest rate hikes is over, and expects prices to rise to $1,850 by the end of 2023.

(With files from Reuters)





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