Gold hit its highest point in three weeks on Monday after the U.S. Federal Reserve Vice Chair, Stanley Fischer, spoke on the Fed’s interest rate hikes. Recently, the Federal Reserve Chair, Janet Yellen, has hinted at incremental increases in policy rates in one of the three upcoming Federal Open Market Committee (FOMC) meetings later this year. These possible increases would mark the first time in nine years that rates have been raised and would implement a course for the strengthening of the U.S. dollar.
However, in his interview on Bloomberg TV on Monday, Fischer suggested that Fed officials may have discordant plans for rate increases. Fischer noted the ‘temporarily’ low inflation and commented on the eventual balance of inflation rates. His comments suggest that stability is a key factor to increasing benchmark interest rates. While the Vice Chair didn’t give any open information on when the Fed might begin rate hikes, it seems as though they may be delayed. While gold has been displaying a bearish trend, the Fed’s potential delay in increasing interest rates has boosted the metal’s price because of its implications on the U.S. dollar.
This news has prompted the rise in stocks and commodity goods like gold. In accordance, the price of gold has made it to a three-week high of approximately $1,108 because of the weakened U.S. dollar. These bullish signals for the gold market could not have come at a better time.
The recent bear market saw gold prices below average. Many who anticipated the price of gold to drop were likely compelled to compensate for their speculation of decline in gold price.
The low inflation trend of the recent market has been a bit puzzling due to the current circumstances of the job market. While the decrease in the unemployment percentage would normally suggest rising inflation, it has not quite been the case in the latest market news.
Of course, Monday’s gold price raised questions about the 20 Day Moving Average (20 DMA) of $1,104, as well. Because gold broke the $1,104 barrier, the metal’s prices could be indicative of a bullish future if it closes at a price above $1,110. While this break in the barrier may suggest a bullish trend, it could also mean that the short-term gold prices would potentially show bearish trends and dip toward the lower end of the 20 Day Moving Average.
There is still hope, however, as Monday’s afternoon prices remained steadily above the $1,104 20 DMA around $1,108. Not to mention that the past 30 days have shown a steady market, which could indicate good news. To be sure, keeping a weather eye on the prices in the days to come will, hopefully, bring news of a bull market.