Gold Holds Near Eight-Month High

Gold prices held almost eight-month highs hit in the earlier session on Wednesday. This was amidst concerns about ongoing U.S. – China trade talks as well as ahead of a policy decision by U.S. Federal Reserve, where interest rates will most probably remain unchanged.

Spot gold remained steady at 0050 GMT by $1,311.41 per ounce. Prices rose to their highest at $1,311.98 since May 2015 last Tuesday. U.S. gold futures also rose 0.1 percent at $1,310 per ounce.

Traders are waiting for clues from the Federal Reserve as to whether it will put a pause on its current rate hike campaign. The Federal Reserve policy makers started a two-day policy meeting on Tuesday.  A few U.S. central bank officials have stated that they will be patient about raising rates with the current stalemate over global trade, the waning consumer and business confidence, as well as the longest U.S. government, shut down in history.

Federal Reserve policymakers will release a policy statement at 1900 GMT on Wednesday, followed by a press conference by Jerome Powell, the Federal Reserve Chairman.  Gold usually rises on expectations of lower interest rates, thereby reducing the opportunity cost of holding this non-yielding bullion.

Criminal charges against telecommunication giant Huawei Technologies Co. Ltd by the U.S. added to the investors’ jitters.  Investors worry that the charges cause further complications at the high-level trade talks between China and U.S. that started on Wednesday. Liu He, China’s Vice Premier has arrived this week in Washington to meet U.S. officials including Donald Trump.

British lawmakers did not accept most of the proposed amendments that were aimed at keeping Britain from leaving the European Union without making a deal. This revived worries that a chaotic withdrawal from the trading block could cause damage to Britain’s; economy.  SPDR Gold Trust holdings, one of the world’s biggest gold-backed exchange-traded funds rose by 1.01 percent to almost 823.87 tonnes. Swiss jewelry imports also witnessed a rise almost by two-fifths over the year to an astounding 16 billion francs, most of which poured in from the United Arab Emirates.   

Interestingly, Swiss gold exports fell in 2018 to their lowest levels since 2012.

Fears over global growth and U.S. monetary tightening has set gold prices up for gains this year. However, experts predict that the metal will find it difficult to break above the current high.

Copyright © 2019. FinanceOrange. All Rights Reserved.