Gold price waits for policy from the Fed

Gold price on May 24 was not much volatile as investors waited to see if the US Federal Reserve (Fed) would maintain an easy monetary policy.

Closing the session, spot gold on the New York market fell 0.2 USD an ounce to 1,880.5 USD. In the last week, there was a time when spot gold prices hit a high of $1,889.7 an ounce – the highest since January 8, 2021.

The dollar and falling Treasury yields are supporting gold prices, said Bob Haberkorn, senior market analyst at RJO Futures.

Gold price movements in the past 24 hours.  Photo: Kitco.

Gold price movements in the past 24 hours. Photo: Kitco.

On the first day of the week, the USD lost 0.2%; Treasury yields fell to 2-week lows, the opportunity cost of holding gold, a non-yielding asset, fell.

This week, investors are waiting for a clearer policy message from the US Federal Reserve (Fed), whether the Fed will continue to maintain the loose monetary policy or not. At the same time, they are also waiting for information on US GDP, the number of people filing for first time unemployment and the number of durable consumer goods orders. Durable goods orders are an important economic indicator. Businesses and consumers generally place orders for durable goods when they believe the economy is improving and vice versa.

Mr. Haberkorn said: "If the US economic data is better than expected, it will certainly be negative for gold prices because the possibility of the Fed to reduce the size of the bond buying program will happen sooner. If the US economy is worse than forecast, the price of gold will be able to quickly touch $ 1,900 an ounce.

The number of Covid-19 cases in the US has fallen to the lowest level since June 2020. The average number of new infections in the last 7 days as of May 23 is estimated at 26,000, according to data released by John Hopkins University.

In the last policy meeting in April 2021, the Fed talked about the possibility of rethinking loose monetary policy if the US economy continues to show signs of improvement.

Some other analysts such as Mr. Jeffrey Christian - investment specialist at CPM predicted that the falling Bitcoin price will be an important support for gold price. "The price of gold is quite high right now. There are too many factors that make investors want to buy right now, but in Europe, the US and Canada, the Covid-19 vaccine process is rolling out quickly. Economies are opening up. come back and economic activity grows well. Maybe the gold price will cool down somewhat," he said.

On May 24, the US stock market increased slightly. Tech stocks and stocks of businesses that benefited from the economic reopening pulled the market up.

Closing the session, the Dow Jones Industrial Average rose 0.6% to 34,393.9 points; The S&P 500 inched up 1% to 4,197; technology and telecommunications services stocks increased sharply; Nasdaq index recorded a gain of 1.4% and closed at 13,661.1 points. Shares of Alphabet, Facebook and Microsoft all rose more than 2%. Tesla shares rose 4.4% despite the deep drop in bitcoin price.

Shares of many businesses that benefited from the economic reopening had a strong increase. Shares of American Airlines and United Airlines rose more than 1%. Shares of tour operator Carnival rose 2.7%. Shares of luxury cruise line Norwegian Cruise Line "bounted" up to 4.7% after the airline announced plans to return to the US service this summer.

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