Fed’s Decision Affects Dollar Trading And Precious Metals’ Market
The Fed’s decision to inject money into the economy led to an increase in precious metal prices which saw a new historic high. The gold price reached a new historic high on Friday, nearly $ 1,400 per ounce, amid U.S. Federal Reserve’s decision to continue to inject money into the economy, which could lead to inflationary pressures, writes Reuters.
The best weekly development since May
Precious metal prices climbed nearly 3 percentage points last week, with the best development week of May. Gold recorded a new record, although the dollar advanced on Friday with nearly 1% increase supported by data on the number of new jobs created in America in October, showing, according to economists that the U.S. economy and would come back.
The dollar is ignored
“Investors ignore the dollar in gold, being more attentive to the Fed’s decisions,” said Jeff Pritchard, the Altavest Trading broker, adding that the Federal Reserve‘s actions put pressure on inflation. “Nor was there any doubt that inflation will be a problem at a time. But now if you want to profit from commodities and equities markets are the ones that you can make it,” he explained. Gold spot market price rose 0.2% Friday at $ 1,394.3 an ounce, while the futures price with delivery in December reached a record $ 1,397.8 an ounce.
The dollar rose by 1% on Friday
Tom Kendall, an analyst at Credit Suisse, believes that the advance against a strong dollar gold shows how great is the demand for gold. “There are many ways in which the Fed affects the gold price developments. One is related to the increase in inflation expectations, and the second is about what happened to the U.S. dollar,” he further elaborated.
The dollar rose 1% Friday after data on the number of jobs created by U.S. companies rose more than expected to reach 151,000 jobs, compared with analysts’ estimates of 60,000.
The data came after two days of the Fed Committee’s decision to inject 600 billion dollars into the economy. These results have led some investors to consider the possibility that the dollar may have already reached the lower threshold compared to rival other major currencies, despite the easing of monetary policy outlook.
“The main consequence of the measures to relax the Fed’s monetary policy is the fact that most currencies may lose value in favor of alternative investments such as gold,” said David Thurtell, analyst at Citi.
Simultaneously with the advance price of gold and other precious metals increased value. Thus, the price of silver has almost reached the peak of the last 30 years, while palladium hit a nine years.
Gold recorded a new historic record, dangerously approaching $ 1.400 an ounce, soared to $ 1.398 an ounce, silver has posted the best performance in the last 30 years, and copper, metals market barometer, the last two years . In the past five years, yellow metal prices spiked to 204.18%, and in the last 12 months, the increase is 27.67%. A year ago, when gold is trading to $ 1044.25 per ounce, most analysts predict tough times for the gold meant, in their view, a significant impairment in value. In general, aiming to forecast market trends metals emitted a pronounced pessimism. Few predicted a radical change in this economic segment. But the U.S. dollar chaotic dance offered surprise after surprise, strongly influencing the behavior of investors, amid confusion about the global economic recovery, have rediscovered a refuge in precious metals, and the pace of recovery of Asian economies back into raw materials carefully.
Last pulse gave rise to the metal market of the U.S. Federal Reserve, who decided to inject additional $ 600 billion in the American economy. In addition, Fed’s action has rekindled fears of “currency war“. Greenback has depreciated immediately, involving a new wave of price rises of raw materials. “In this context, silver, gold smaller cousin, is increasingly becoming a viable alternative for investors, economists have pointed to the IG Index, commenting advance metal gray, which has progressed to $ 26.90 per ounce, the unprecedented in March 1980.
Palladium, raw material used heavily in advanced technologies in the automobile industry, climbed to $ 699.50 an ounce, the best price in April 2001. The base metal camp, copper, strategic element of this market, reached $ 8.769 per ton, a level untouched since July 2008. And they said, also on supply fears amid word of social movements from a mine in Chile, the first global manufacturer of metal red. Callahuasi mining giant, which makes about 3% of global copper production, has been paralyzed over the weekend by a strike of protest against the failure of wage negotiations.11