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InstaForex

April 28, 2021

Reasons Why Gold Investors Should Be Cautious

 Gold failed to maintain its strength by falling lower ahead of the FOMC policy announcement.


During the Asian session, spot gold traded hovering around $ 1,771 per ounce, after falling to a low of $ 1,766 previously.


The decline can be attributed to the resurgence of 10 -year U.S. treasury yields which rebounded at 1.62% and lifted U.S. dollar trade higher.


The unexpected fall in Australia’s inflation rate in the first quarter of 2021, also weighed on the price of gold which is often seen as a hedge to inflation.



The main focus of the market this week is targeted at the FOMC policy meeting which has started on Tuesday and will end early Thursday morning (Malaysian time).


While no change in monetary policy by the Federal Reserve (Fed) is expected, but the market will examine the central bank’s inflation outlook and statements on policy direction in the future.


Also of market concern, is the publication of US economic growth data for the first quarter of 2021 which is expected to rise higher than the previous reading.


Thus, gold investors need to be more careful in positioning ahead of these two market-focused events.