by David Levenstein, Mountain Vision:
Gold prices were under pressure for most of last week, as investors anxiously wait for the outcome of the US Federal Reserve bank’s important September meeting. The price of the yellow metal fell by almost 1 percent over the week to close at $1310 an ounce.
The insane obsession about a potential interest rate hike continues as all eyes remain focused on the September 21 meeting. Recently, most people seemed to feel a September rate hike was unlikely, but now over the course of a week and a bit of hawkish Fed-talk, many now seem to believe September rate hike may actually be in the cards. I am of the opinion that the Fed will not increase rates at this meeting. The September FOMC that takes on September 20-21, 2016 will show what the Fed has decided regarding interest rate when their decision comes out around 2 p.m. on September 21.
Financial markets across the world have been taking their cues from central banks for years and we know the Federal Reserve wants to at some point begin raising rates. However, the timing of this continues to be uncertain. Even if they decide to increase the Federal Funds Rate, by 25bps or even 50bps over the next six months or so in an attempt to avoid any over reaction in bond markets, such a small increase is unlikely to have a much of an impact on gold prices over the long-term. As I have already pointed out countless times, this is not the only event to influence gold prices.
While the Fed is expected to increase rates at some time in the future, other major central banks are keeping rates low. On Thursday, the Bank of England (BoE) voted unanimously to keep the Bank rate at 0.25% and the asset purchase program at 435 billion pounds.
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