Gold Declines as US Economy Shows Signs of Strength
March 28, 2014 7:10 amVideo
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Gold has been on an up and down trend in recent weeks, as tensions in Ukraine are pushing people toward the precious metal, while other factors are leading investors to other markets. The latest news on U.S. interest rates led gold to fall the most in 13 weeks, as investors don’t want to purchase this metal with the potential for rates to rise, according to Bloomberg.
Federal Reserve Chair Janet Yellen said that the bank’s benchmark rate could increase six months after monetary stimulus ends, which should be later this year. Following this announcement, gold dropped 3.1 percent.
This is important information for investors who trade gold, as interest rates will have a major impact on their investments. People should keep a close eye on any future announcements about the benchmark rate to help get ahead of market movements.
“People don’t want gold in a rising interest-rate environment,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, told the news source. “While concerns about Crimea remain, there has been no escalation in violence for people to jump back into the safe-haven asset.”
The ability to accurately predict how the Fed will move interest rates would be valuable information to gold traders. While there is no way to know for sure what will happen, there are numerous indicators that could signal movement.
For example, if the U.S. Commerce Department releases positive reports on manufacturing, consumer spending or CPI, the economy could be improving, which, in turn, could lead to future rate increases.
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