cryptocoin.com As we have reported, the gold price, which has been moving in a very controlled manner as the US Federal Reserve looks to the next policy meeting, where it is widely expected to raise interest rates to quell rising inflation, rose by approximately 1.50% to $1,840 after the US markets opened. However, analysts say that gold will decline soon with Fed expectations.
“Gold price moves with Fed rate expectations”
Stating that ongoing geopolitical tensions, including concerns about Ukraine and Russia, may be the driving force for some investors to buy gold, IG Markets analyst Kyle Rodda makes the following assessment:
But in the big picture, this issue is trivial compared to Fed policy. The gold market is moving with Fed rate expectations.
The US dollar index (DXY) stayed just below a weekly high, bolstered by US Treasury yields rising to two-year highs on forecasts of aggressive rate hikes ahead of the Fed’s January 25-26 meeting.
Higher interest rates tend to reduce the attractiveness of non-yielding bullion. Michael Hewson, chief market analyst at CMC Markets UK, says that if rates continue to rise, gold is likely to drop to $1,800, but gold is still in the range it has been in over the past few months:
The $1,830 level is proving to be pretty insurmountable in the short term. Further increases in interest rates and the dollar are likely to put downward pressure on gold prices.
However, at the time of writing, it should be noted that the level of $ 1,830, which the analyst saw as insurmountable for gold, was exceeded and $ 1,840 was seen.
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