Gold prices hit a 5 week low on Friday as traders anticipate a rate hike at the March FOMC meeting.
Speculation overwhelmingly predicts a rate increase of 25 basis points, to be announced tomorrow. A strong dollar and positive manufacturing reports have contributed to a market that Fed officials believe can withstand potentially 3 rate increases this year.
Gold prices have reacted strongly to the impending rate hike, hitting some of the year’s lowest spot prices. Prices have slightly leveled due to underwhelming non-farm payroll data released Monday morning. A weakened labor market spurs increased gold prices, providing a respite from last week’s bear market.
Many expect gold prices to continue their decline, as the dollar index is strengthened and investors seek higher yielding investment commodities.
A bit of good news for gold is the political unrest in Europe, which brings the potential to alleviate some pressure put on the precious metal. Lingering Brexit uncertainty and election woes have given European investors a motive to continue buying gold.
Reports for 2017 gold prices vary greatly by day; only time will tell just where the commodity goes.
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