It was enough to move some points by Fed officials for precious metals prices to experience very strong declines. Largely it was the result of a sharp rise in the value of the dollar.
Following Wednesday’s announcement by the Federal Open Market Committee (FOMC), investors received something they did not expect. Still too “pessimistic” rhetoric from the Federal Reserve, virtually zero interest rates and generous quantitative easing ($120 billion per month)), however, was accompanied by a significant shift in the so-called Phaedodotus.
The June distribution shows that there will likely be a majority within the FOMC opting for two increases in the federal funds rate by the end of 2023. Meanwhile. Mars “Vidocropci” indicated an increase in In 2024 at the earliest, which is of course not a difficult commitment. In the past, federal decision makers have changed their minds many times, regularly resigns from the increases announced in 2010-16. Anyway, the threat to raise interest rates by 50 basis points. It doesn’t look so terrible in a couple of years at the earliest.
However, the market reaction was very strong. Especially in the currency market, where the EUR/USD exchange rate fell from more than 1.21 before the FOM statement to more or less 1.19 on Thursday evening in the past 48 hours. Moving two big lots on the major currency pair is really a lot.
It was this sharp rise in the value of the dollar that triggered a chain reaction in the precious metals sector. On Thursday, gold futures prices fell more than 2% after discounting 2.6% the previous day. Since Friday, gold futures prices have fallen by more than $120 an ounce, dropping to $1,773.70 an ounce. In this way, the entire increase in gold prices in May was eliminated.
The heavy selling on Thursday led to a significant deterioration in the technical picture of the market. Dollar gold contracts broke the 200-session moving average and returned below the descending trend line, which was able to break through in mid-May. This may discourage more speculative market participants from playing on the increases. On the other hand, based on the RSI, gold entered an oversold state for the first time in more than three months.
Less noble gold relatives fell more. Palladium rate It fell more than 11% on Thursday to below $2,500/oz. platinum They are down over 5% and cost $1,061.40/oz. silver It was reduced 4% to just under $26 an ounce.
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