Gold drops as Fed points to quicker end to stimulus
Gold prices slipped in volatile trade on Wednesday after the U.S. Federal Reserve signaled a sooner-than-expected interest rate hike and easing of its bond purchases by the middle of next year.
· Spot gold fell 0.4% to $1,767.38 per ounce by 1943 GMT, while U.S. gold futures settled up 0.03% to $1,778.80.
· Federal Reserve holds interest rates steady, says tapering of bond buying coming ‘soon’
Federal Reserve Chair Jerome Powell said tapering of bond purchases could be done by mid-2022 following a statement from the central bank that also signaled interest rate increases may follow more quickly than expected.
· The price of gold has been volatile on Wednesday following the Federal Reserve's interest rate decision that has just been released.
XAU/USD has rallied to a fresh high of $1,786.87 in a 1% move between $1,769 and $1,787.87 so far. The FOMC statement gives rise to an imminent taper announcement.
· “It was quite vague before Powell outlined the timeline for tapering and the clarity he presented is weighing on gold,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
What is having a somewhat positive influence on gold is that the Fed did not start tapering right away and they are still very dovish in their statement, Streible said.
· Elsewhere, palladium leapt 5.9% to $2,017.94 per ounce, set for its best day since May 2020, while platinum jumped 4.4% to $995.27.
· “There’s a belief that platinum and palladium got over-sold, and concerns that a Chinese slowdown story caused by the Evergrande crisis was overdone,” and the sell-off has probably run its course said Ed Moya, senior market analyst at brokerage OANDA.
· But the longer a chip shortage hobbling vehicle production lasts, the weaker palladium’s recovery may be, analysts said.
· Silver too followed along, rising 0.9% to $22.67 per ounce.
· U.S. home sales fall, house price inflation cooling
Existing home sales dropped 2.0% to a seasonally adjusted annual rate of 5.88 million units last month. Sales fell in all four regions, with the densely populated South posting a 3.0% decline. Economists polled by Reuters had forecast sales would decline to a rate of 5.89 million units in August.
· Biden and Macron plan to meet as the U.S. and France try to smooth things over in their submarine saga
President Joe Biden spoke Wednesday with French President Emmanuel Macron as the leaders sought to smooth tensions following a messy arms deal with Australia that triggered a diplomatic row resulting in France – America’s oldest ally – recalling its ambassador to the U.S.
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· Average daily U.S. Covid deaths climb above 2,000 for the first time since March
· FDA authorizes Pfizer’s Covid booster shots for people 65 and older and other vulnerable Americans
· Under pressure, U.S. donates half billion more COVID-19 vaccine doses to world
The United States on Wednesday promised to buy 500 million more COVID-19 vaccine doses to donate to other countries as it comes under increasing pressure to share its supply with the rest of the world.
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