After rising sharply on Monday 4 due Fed’s dovish statement, yesterday’s gold price was volatile, up 0.3% from the open price of $1,167.19 to the close price of $1,170.15.
Gold price is likely to rise because of the following reasons:
- Unemployment claims totaled 291,000 yesterday, weaker than forecast higher than last month. Philadelphia manufacturing index reached 5.0, lower than expected (7.2) and both figures last month (5.2). According to experts, although the data is weak but still showed the US labor market is stable.
- Even though the Fed is expected to lower interest rates and not tighten in April, it still may raise rate in June or September, which may help to boost dollar, but not enough to pull the gold price back.
- China (2nd largest gold consumer in the world) is about to diversify participants in gold market, with the aim of connecting the gold market in Mainland to the international market.
- The economy in India – the largest gold consumer in the world – are showing signs of recovery. Rupee and Indian stocks surged after the Fed’s statement.
However, gold price may decline because of the following reasons:
- Fed’s dovish move may make capital flow to other markets. Investors may choose securities in emerging market instead of U.S. stock or gold.
Forecasting: Price may surge to $1,177.55.