HSBC: Gold Gains Despite Fed Hint At Rate Hike Indicates Underlying Strength
The strength in gold, despite a Federal Open Market Committee statement Wednesday saying risks to the U.S. economy have diminished, suggests underlying strength in the precious metal, says HSBC.
(Kitco News) - The strength in gold, despite a Federal Open Market Committee statement Wednesday saying risks to the U.S. economy have diminished, suggests underlying strength in the precious metal, says HSBC.
The Fed statement essentially set the tone should policymakers want to hike rates yet this year, HSBC says.
“Normally this would be expected to weigh on gold, but it clearly did not,” analysts say. We think gold is gaining upward momentum after holding well above $1,300/oz in the face of a firm USD (U.S. dollar)….We see potential headwinds for gold if the market begins to assess a U.S. rate rise as coming sooner, rather than later. But gold’s rally, despite positive statements from the FOMC, may indicate underlying strength. Investors may shift attention to the Bank of Japan’s policy meeting this Friday, the results of which could be gold friendly.”
Courtesy: Kitco News