The issue of 'Tapering' resonates again, this is why gold investors need to be careful - Kakiforex.com - Financial Market Media No. 1 in the World The issue of 'Tapering' resonates again, this is why gold investors need to be careful The issue of 'Tapering' resonates again, this is why gold investors need to be careful
InstaForex

June 16, 2021

The issue of 'Tapering' resonates again, this is why gold investors need to be careful

 The yellow gold metal traded lower on Wednesday as markets took a cautious approach ahead of the FOMC’s monetary policy announcement early Thursday morning.


In the Asian session, spot gold traded around $ 1,855 per ounce, while gold futures were stable at $ 1,856 per ounce.


The 10 -year US treasury yield rose higher approaching the 1.5%level, thus supporting the US dollar’s ​​trade to strengthen against most major currencies.


All eyes are now focused on the Federal Reserve (Fed), with central bank Chairman Jerome Powell scheduled to speak after the monetary policy announcement following the recent rise in inflation.



While the central bank is expected to continue to maintain its interest rates until 2023, there are expectations that discussions on a reduction in its monthly bond purchases (tapering) will erupt.


The increase in the producer price index published in the previous session, indicates that there was upward price pressure, where producers had to increase production costs to meet strong demand. This indicates that inflation continues to rise.


However, a disappointing reading of US retail sales data is likely to cause the Fed to remain dovish. Following that, investors are more cautious before placing positions against gold.


Unexpected retail sales have shown a decline, as consumer spending shifted to services rather than goods in May.