In January, the Federal Reserve met at a two day meeting and issued information that to many was nebulous at best. Their decision on interest rates didn’t do much for the price of gold and investors are wary as to what will happen in the short and long term.
The effect was global as prices in Asia drifted lower because of the direction US interest rates will go. February’s outlook for gold fell 0.08% on the Comex. Silver, however, rose 0.09% and copper for March fell 0.13%.
The fall of the gold futures last Thursday occurred because of softer US economic information. The Fed gave such wavering information that investors didn’t know which way to go. In addition, the metal traders worldwide got a bit of a letdown as the FOMC (Federal Open Market Committee) decided to leave the short term interest rates unchanged. Last Wednesday the FOMC decided to keep their rates the same citing the slow planetary economy. Not surprising, this decision came a wee bit over a month’s time after the Fed lightened up a bit with its first rate hike in 7 years.
Those in the know are still up in the air regarding which way the Fed will go with interest rates. Some are hoping for a hike in March, but considering this is an election year it might be a negative or positive label for the Obama administration. Analysts are looking at labor, consumers, and more to make a better guestimate as to what to expect and place their bets on.
Inflation is an even bigger factor. At present inflation doesn’t look good for better things.
It’s clear that things aren’t going all that good for the gold futures but that could change at any minute and not because of decisions by the Fed or FOMC. There are so many factors involved and without a major war going on the old ways of boosting interest aren’t working anymore. It’s more now a situation of relying on a combination of institutions like the Fed and what the public overall are doing. There are issues regarding labor at work here.
Corporations in the US are being badgered to hire more Americans. Of late a controversy regarding the Hb series of immigrant worker laws has Americans and politicians at an impasse. It doesn’t look like industry nor corporations are interested in providing more jobs for Americans which would boost consumer spending. It is still an issue of stockholders and corporations trying to save money on the employment end with cheap labor than reinvesting in the American workforce, which they promised to do for the massive tax breaks and subsidies they’ve gotten.
With the upcoming elections and candidates like Bernie Sanders pushing for more higher wages, employment, and other changes, it may be just what the doctor ordered. If Americans start making more money, the Fed will raise those interest rates and the FOMC will follow the lead and gold will rise by default.