Published: 2019.08.13. Gold price and US Fed uncertainty

Gold price and US Fed uncertainty - Preview

The price of gold in Asian markets showed a decline after it became known that the US Federal Reserve lowered the interest rate, as expected the day before. But at the same time, a hint sounded that a further reduction in rates would not be long.

Yesterday, July 31, the US Federal Reserve cut interest rates by 25 basis points. This happened for the first time in the last ten years, that is, since the beginning of the financial crisis of 2008-2009. However, Fed officials said nothing about whether to expect further decline in September this year, although investors and traders hoped that the US regulator would more clearly outline the future prospects of its monetary policy.

During the press conference, Fed Chairman Jerome Powell gave conflicting signals to financial markets. Among other things, he said that this reduction in the rate is not the beginning of a long cycle, but will not remain a one-time reduction.

During the speech, he could not clearly substantiate why his department lowered rates if, according to official statistics, things are going well in the US economy. However, he nevertheless emphasized that due to the trade conflict with China, some American companies took a wait-and-see attitude in deciding on their investment programs. According to the portal, at the end of the press conference, Jerome Powell still hinted at a further reduction in rates, but did not give any exact figures.

According to RJO Futures analyst Philip Shtriblya, the price of gold will remain quite volatile until traders digest all the information voiced by the head of the Fed. “In general, the global economy now looks good. But there are some concerns that by the end of the year it may demonstrate a slowdown. In this case, the price of gold will receive support for further growth, ”the expert said.