Contact us
CALL US NOW 1-888-GOLD-160

Gold Keeps Gains as Fed Minutes Show Doubts About Rate Policy

  by    0   2

Oil prices rose and the dollar weakened Wednesday as gold futures maintained a three-week high even as the release of FOMC minutes seemed to suggest a more aggressive rate hike schedule was being considered, according to MarketWatch.

After its vote last month to raise the Federal funds rate 25 basis points, the Fed estimated three quarter-point rate increases for 2017. However, the FOMC minutes suggested there were a “number of risks” that would necessitate a “different path of policy” than they expected. One of those “risks” was clearly Trump’s stimulus plan, and the “uncertainty regarding fiscal and other economic policies.”

gold laid out to make a road

Normally, the suggestion of more rate increases would have sent the dollar higher and gold prices lower, but in this case, the Fed’s comments seem to have rung hollow for many gold investors.  Shortly after the release of the minutes, February gold futures hit $1,165.30 an ounce in electronic trading, a gain of $3.30 and the highest finish since December 12.

One likely cause for gold holding its ground is the continued uncertainty surrounding Trump’s plans, which the Fed admitted had “increased”. “There is a nice mix of uncertainty and concern on economic conditions moving forward and this should help keep a bid under gold,” stated Bill Baruch, chief market strategist at iiTRADER.

The nonfarm payroll numbers come out this Friday, and Baruch sees them as influencing what “gradual” paced rate hikes will look like moving forward. With respect to gold prices, Baruch sees a “big resistance at the $1,175 level and big support building at $1,145.”

While the uncertainty of Trump’s economic plans keep investors hedging their bets, the reality of lower taxes and fiscal spending will likely bring about absolute uncertainty about wider budget deficits and how the Fed will monetize them. Janet Yellen has already stated the Fed will hold its balance sheet steady by rolling over maturing treasuries until “the process of normalization of the federal funds rate is well underway.” But kicking the can down the road doesn’t fix the looming currency crisis nor does it instill confidence in the public.

Get Peter Schiff’s latest gold market analysis – click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Day 28: Brazen Trump Inspires Murky Global Markets

The Trump 100: His first 100 days as presidentYellen spoke to congress this week, and her remarks about the new Commander in Chief could be foreshadowing an upcoming battle between the Fed’s goals and Trump’s plan to weaken the dollar. The President also made amends with China’s President Xi Jinping, but has new problems to deal with as other foreign governments shed their […]


Yellen’s Speech Balances Stable Growth with Unstable Trump

Federal Chairwoman Janet YellenFed Chairwoman Janet Yellen testified before Congress today with a hawkish tone that sent gold prices downward and bond yields upwards prior and during her testimony. Gold spot prices were down around $11/oz. toward the end of Yellen’s testimony. The 10-year note rose to 2.5% from 2.43% while the 2-year note yield jumped to as […]


Day 21: Trump Begins Looking Into Financial Regulation Reform

The Trump 100: His first 100 days as presidentTrump’s third week in office brings us a look into rolling back financial regulation reforms, the power of the @POTUS’s tweets, and the new Department of Education director. New Executive Order Likely to Target Dodd-Frank This week, Trump signed an executive order calling for a review of financial regulations. Many Democrats are concerned the audit […]


US Silver Eagle Sale, as Low as $2.59 Above Spot

SchiffGold is having a special promotion on 2017 US 1 oz. Silver Eagles. Silver prices have already gone up 11% since the beginning of the year. Get in on the ground floor of one of the safest havens for protecting your wealth. Secure these exclusive coins while there’s still time. Offer details: • All Silver […]


Why Silver Prices Will Rise with Trump’s Stimulus Plan

pile of silver coinsSilver prices have been climbing steadily recently, rising almost 12% since the beginning of the year. The cost of silver is normally closely tied to the rise and fall of the price of gold, which has also seen a recent jump. Causes for the push in precious metals include a sluggish dollar, political and economic […]


Comments are closed.