fear of rate hike

Gold Price Down On April Rate Talk

March 23rd, 2016 by

fear of rate hikeGold prices are under heavy pressure this morning, as multiple Fed officials raise the possibility of an April interest rate hike. This talk is boosting the dollar, which was already getting support from Europe as the euro and pound fall in the wake of the Brussels terror attack.

Spot gold is down over 2% this morning, trading around the $1,220 mark. Silver and platinum are down over 3% in early trading. In other outside markets, oil futures are down over 1%, weighed by an unexpectedly large crude stockpile build in the US as well as a stronger dollar.

Gold’s technical numbers this morning have already invalidated first support at $1,220 an ounce, with $1,216 now the new line in the sand. Resistance was $1,229 this morning, followed by $1,232. April gold closed up $4.40 yesterday at $1,249.60 on safe haven demand after the Brussels bombings. Spot gold gained $4.70 to close at $1,247.80

Stocks in New York opened lower, after blowing a seven-session win streak yesterday due to the Brussels terror attacks. While the Dow and S&P 500 ended up from their lows, they couldn’t make that final push to end in the black.

oil stockpilesThe International Energy Agency is calling the meeting next month among the major oil producers “meaningless,” as Saudi Arabia is the only that isn’t already pumping at 100%. They say that the gesture is aimed at calming the crude market by appearing to stabilize prices.

The report late Tuesday by the American Petroleum Institute showed an increase of 8.8 million barrels in the US crude stockpile last week. This was almost triple what analysts were expecting. Oil futures closed down 7 cents to settle at $41.45 a barrel, while Brent crude gained 25 cents to end at $41.79.

The dollar is getting good support from the talking heads of the Federal Reserve, as the media blitz to put an interest rate hike on next month’s FOMC agenda continues. If the greenback can continue this pace, it will be its best week in a month.

St. Louis Federal Reserve president James Bullard joined the flock of Fed rate hawks this morning, saying that he believed that the Fed will overshoot its employment target and will need to speed up future rate hikes. Just last week, the Fed presidents hit the press circuit to say that they saw only two rate hikes this year, instead of the four originally expected. Perhaps they believed that the markets had become too complacent, so embarked on this present media blitz.

Joining Evans in the “April’s still on the table” chorus was Philadelphia Fed president Patrick Harker, Atlanta Fed president Dennis Lockhart, and San Francisco Fed president John Williams.

US markets will be closed for Good Friday this week, so expect traders to take defensive positions ahead of the three-day weekend.


The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product