What’s Next For Gold Price After Post-Fed Jump?

London (Mar 22)  The yellow metal followed a well-learned trading pattern after the Federal Reserve’s decision to raise rates by 25 basis points to a range between 1.50% and 1.75%, Jordan Eliseo told Kitco News on Thursday.

“Gold replayed a familiar pattern on Wednesday — easing a little bit in the lead up to the Fed meeting and then jumping higher after the rate hike was pushed through,” Eliseo said.

This pattern was clearly visible after the December 2015, December 2016 and a couple of 2017 rate hikes, Eliseo pointed out.

Gold’s rally on Wednesday was not a surprise, but the magnitude of the “quite impressive” price jump was, according to the chief economist.

“Gold is essentially up $15, it’s a pretty significant move to rally just over 1%,” Eliseo said.

April Comex gold futures were last seen at $1,331.10, up 0.73% on the day, after trading above $1,336 on Wednesday.

The increase in the gold price points to a market doubting the Fed’s intentions to hike aggressively this year, Eliseo explained.

“If you look at how much tightening is already priced into the market based on the Fed’s dot plots, gold is well positioned even if the Fed does hike rates at least another two times this year,” he noted.

Wednesday’s FOMC press conference was the first one for the new Fed Chair Jerome Powell, but it didn’t seem to matter to the markets, added ABC Bullion’s chief economist.

“As much as we love to obsess around the ability of a particular person to drive the market, it’s not about who sits as the chair, but the decisions the Fed makes, the rationale [the committee] gives for making them, and the projections for the future.”

KitcoNews