Gold Price at Highest Level Since 2014 After Fed Meeting

- June 19th, 2019

Gold and silver prices rose on Wednesday after the US Federal Reserve said it will be leaving interest rates unchanged.

Both gold and silver made gains on Wednesday (June 19) after the US Federal Reserve announced it will be maintaining current interest rates rather than cutting them. The news caused the US dollar to tumble and the yellow and white metals to rally.

The Fed made its decision after two days of meetings, ignoring pressure from US President Donald Trump to decrease the current interest rate, which is a range of 2.25 to 2.5 percent.

According to Bloomberg, Trump allegedly looked into options earlier this year for getting Jerome Powell removed as Fed chairman, going as far as asking for advice from lawyers at the White House.

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While rates will stay steady for now, Wednesday’s statement alludes to the idea that the Fed could cut rates by as much as half a percentage point later this year.

Experts read these comments closely in an effort to make predictions, and in May, when it last released a statement, the Fed said it would “be patient” when adjusting rates. In the latest release, the word “patient” is not present.

The meeting also resulted in the Fed decreasing its headline inflation projection for 2019 from 1.8 percent to 1.5 percent. Core inflation is seen rising at 1.8 percent compared to 2 percent previously.

As mentioned, the news sent gold and silver prices rising. Gold in particular hit a milestone, rising as high as US1,383.81 per ounce, its highest point since March 2014.

“Even though the Fed didn’t cut rates, the market expectation for a dovish environment and a likely rate cut in July are positive for gold,” Maxwell Gold, the New York-based director of investment strategy at Aberdeen Standard Investments, told Bloomberg.

Silver is also benefiting from the Fed’s decision, although not as much, rising over 0.6 percent following the announcement. It rose as high as US$15.28 per ounce on Wednesday.

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In its latest report, FocusEconomics says that analysts it has polled are optimistic about the white metal.

“Prices should continue to trend higher moving forward. Barring a significant global slowdown, demand for industrial fabrication is projected to rise this year, as should demand for jewelry and silverware fabrication,” the report reads.

The silver price is forecast to average US$16.20 in Q4 of this year, before rising to an average of US$17 in the fourth quarter of 2020.

Looking ahead, both gold and silver are expected to continue their upward trends, as they will more than likely be supported by geopolitical concerns and a slow in economic growth.

“As concerns around slowing global growth and trade put further pressure on monetary policy globally gold (and silver) may see further support,” Gold added.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article. 

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