Hey guys,
the above shown screenshot shows you how gold acted at the last two interest rate hikes.
The 14th will be a very interesting day for Gold and the USD.
Interest rate hikes always signals a stronger economy. When the interest rates rise, then investors like to buy the local currency. In this case the USD, because it indicates a stronger economy in the future. Precious metals like Gold (and Silver and Platinum) are in this case more of the losers, because they don't accumilate interest for the investors and become unattractive for them. Gold will always be a currency for crisis situations and thats why a safe haven for investors in uncertain times or a not so good future.
An interest increase is according to Goldman Sachs 90% sure. Thats why you can be sure, that the most of it is already priced in gold at the stock market. More important is, that there will be 3 interest rate hikes in 2017.
On the coming wednesday the investors will try to predict and analyse any facial expressions and gestures of Mrs. Yellen, to draw conclusions. They want to know, if the FED sticks to 3 or will reduce to two rate hikes in 2017, because right at the moment, the economy gives the investors, the FED and the Goverment a little bit headaches.
And that's the big question: Will there be 3 or 2 interest rate hikes?
If this is the case, that there will be only two interest rate hikes, then gold could benefit from this and the USD could get more under pressure. Also the praised economy wonder through Donald Trump, which did not occurred yet, could serve as an accelerator. But one thing is for sure: there will be on wednesday a high volatility at gold, EUR/USD, USD/JPY, DOW JONES.
So be careful guys and stay always safe.
Yours sincerly.
Francois