NEW YORK (Scrap Register): Gold prices may well weaken ahead of a meeting of the Federal Open Market Committee next week, said Commerzbank in a snippet.
After all, this has been a pattern for the yellow metal, which then tends to rise afterward. A U.S. rate hike is expected at next week’s FOMC meeting, the first to be chaired by Jerome Powell.
“It was not unusual for gold to experience phases of weakness ahead of a Fed meeting last year – this was particularly noticeably in the run-up to the four ‘major’ Fed meetings,” Commerzbank added.
“These took place in March, June, September and December and were regarded by the market as possible occasions for the Fed to hike interest rates,” analysts at Commerzbank noted.
In conjunction with these meetings, the Fed releases its latest projections and the Fed chief conducts a news conference.
Gold always shed 3-4% in the two weeks before these meetings. It thus appears to be reacting in a similar way before the upcoming meeting now.
“We therefore believe that it is perfectly possible that the $1,300-per-troy-ounce mark will be tested in the next few days. The gold price should recover again after the Fed meeting, as was repeatedly the case last year,” Commerzbank noted.