Gold Pushes Higher on Weakened US Dollar and Fed Rate Hold

Gold

Gold posted strong gains on Thursday, boosted by a weakened US Dollar and geopolitical uncertainty.

The yellow metal looked set to end a two day losing streak, as investors also mulled over the latest Fed rate decision. The monthly FOMC meeting saw interest rates remain unchanged, a move that was widely expected by the markets.

Gold rallied for the first time in three days as investors cashed in on the recent dollar rally prior to the release of the nonfarm payrolls report due on Friday afternoon. The keenly anticipated NFP figures are expected to show the world’s largest economy created 189,000 jobs last month.

Gold prices were also boosted by Federal Reserve monetary policy statement  made on Wednesday which was less than hawkish. Interest rates are expected to rise two more times this year. The Federal Reserve kept to its regular narrative of “gradual” interest rate increases even though it recognized that inflation was edging closer towards its 2% target.

At time of writing, gold is up 0.52%, with a troy ounce trading at $1312.40

Gold Demand Lowest in First Quarter Since 2008

 

In a report released by the World Gold Council on Thursday, the yellow metal fell to its weakest first quarter since the global financial crisis of 2008. Rising interest rates and the prospect of further raises in rates have deterred investors from gold, although prices in gold as a safe haven investment have been buoyed by geopolitical concerns in the Middle East and the US – China trade war.

Global demand for the precious metal totaled 973.5 tons in the first three months of this year, a figure that is down 7 percent from the same time last year.

Jewelry consumption also falling at the start of the year, inching 1 percent lower. Demand for gold has been steady in the US reported Universal Coin & Bullion, Ia leading coin and bullion seller. In India which is  the second-largest consumer of gold jewelry consumer also had  its weakest quarter since 2008, plummeting 12 percent on a yearly basis to 87.7 tons.

For now, investors will be monitoring talks to end the China US trade war later in the day for movement in the US dollar and Gold as well as the NFP reports on Friday.