As the Asian trading session got underway on Friday, gold rediscovered its upward movement and re-crossed the $4,200 mark that had previously been breached. This new momentum seems to be driven by growing concerns among investors regarding the economic outlook of the United States in the wake of the re-opening of the government after a lengthy shutdown.
The USD has remained depressed, and that has added fuel to the demand for gold since foreign-currency holders benefit as they buy gold using a weaker dollar.
Equity markets have also experienced some dampening due to uncertainty about economic stability, and this has drawn investors towards safe haven assets like gold. In the U.S., many Fed policymakers are of the view that more caution needs to be exercised in determining further reductions to the interest rate.
This caution comes as the needed economic data upon which Fed rate decisions are made isn’t available, so any decision to ease monetary policy wouldn’t be backed by reliable data. The possibility that interest rates will not be reduced at the next FOMC meeting could weigh on gold since the precious metal doesn’t generate any interest.
Now that the U.S. government has re-opened, attention is firmly on the economic situation of the country, and things may not be so good. Many analysts are of the view that when economic data is finally released, it will show that the economy has weakened, and this could make a strong case for additional rate cuts.
Some economists predict that the quarterly growth of U.S. GDP could have suffered a 1.5-2% hit due to the extended government shutdown. The labor market is showing signs of weakness, which strengthens the view that the economy isn’t as healthy as many would want.
When a senior official at the White House hinted that economic data for October is unlikely to be released, many Fed officials expressed their hesitation to support further easing of the benchmark interest rate. Expectations of a rate cut during the December Fed meeting have consequently reduced to about a 50% chance while expectations of a rate cut in January now stand at 75%, per the FedWatch Tool of the CME.
Many traders and companies like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) will be looking out for any opinions expressed by influential members of the FOMC as such views could provide signals about the likely outcome of the Fed meeting next month. The momentum of the gold market could be impacted by any decision made during that meeting.
About Rocks & Stocks
Rocks & Stocks (“R&S”) is a specialized communications platform delivering deep insights into the mining industry. It is one of 70+ brands within the Dynamic Brand Portfolio @ IBN that delivers: (1) access to a vast network of wire solutions via InvestorWire to efficiently and effectively reach a myriad of target markets, demographics and diverse industries; (2) article and editorial syndication to 5,000+ outlets; (3) enhanced press release enhancement to ensure maximum impact; (4) social media distribution via IBN to millions of social media followers; and (5) a full array of tailored corporate communications solutions. With broad reach and a seasoned team of contributing journalists and writers, R&S is uniquely positioned to best serve private and public companies that want to reach a wide audience of investors, influencers, consumers, journalists and the general public. By cutting through the overload of information in today’s market, R&S brings its clients unparalleled recognition and brand awareness.
R&S is where breaking news, insightful content and actionable information converge.
To receive SMS alerts from Rocks & Stocks, text “Rocks” to 888-902-4192 (U.S. Mobile Phones Only)
For more information, please visit https://RocksAndStocks.news
Please see full terms of use and disclaimers on the Rocks & Stocks website applicable to all content provided by R&S, wherever published or re-published: https://RocksAndStocks.news/Disclaimer
Rocks & Stocks
Los Angeles, CA
RocksAndStocks.news
310.299.1717 Office
[email protected]
Rocks & Stocks is powered by IBN
