After months of speculation, the US Federal Reserve raised interest rates from 1.5 per cent to 1.75 on the 21st March. Suspicion of this oncoming hike has defined the gold market for the best part of the last six months, with gold’s recent low price inflation being partly attributed to it.
On the 1st March, the gold price opened at a trading value of £953.80, slightly up on February’s closing gold price. After a brief hike in the month’s opening week, the price dropped through the rest of March, before rising in the final ten days. On the 30th March, gold’s closing price was £945.69; a slight dip on the month’s opening gold price.
Donald Trump and North Korea
The gold price inflated notably in the opening week of the month, peaking at the month’s highest recorded rate of £960.07 on the 7th March. As President Trump announced his intention to push ahead with proposed trade tariffs against China, investors began to fear an escalating trade war between the two nations, and flocked to gold as a safe haven. Trump’s proposal to meet North Korean leader Kim Jong-un further bolstered this effect.
Federal Reserve rates
The American Economy has a big impact on the gold price. In the days leading up to the Federal Reserve’s meeting, gold eased off on its earlier heights, dropping to £950.66 on the 12th, and even further to the month’s lowest recorded price of £934.59 on the 19th. Fears of the upcoming interest rate rise likely contributed to this.
Despite this, gold began to rebound on this low price once the official decision had finally been announced. As has often been the case with previous rate hikes, fears of a hike tend to weigh down on the gold price, which then rises once a hike has been confirmed. The continuing fears of a US-China trade war contributed to this effect.
Despite the fears of this rate hike having weighed down on gold recently, there’s strong evidence to suggest that the price will begin to look firmer now investors have certainty. Stay tuned to this gold blog and our live gold price updates over the coming months to find out more about these market developments.
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