On the 8th of May, driven by the growth of the U.S. bond yields, the positions of the U.S. currency have appreciably strengthened.
The Chairman of the Federal Reserve Jerome Hayden Powell stated that "some investors and institutions may not be ready to raise rates yet…"
In turn, the Chairman and CEO of J.P. Morgan Chase Jamie Dimon noted the successes in the economic development of America. In his opinion, the USA today occupies a leading position among other countries.
The high price of the dollar was impacted by the statement of President Donald Trump. The head of state warned that if Iran continues to pursue nuclear goals, it will eventually lead to serious problems.
As you know, the price of gold directly depends on the positions of the American currency.
On Tuesday, 8th of May, the price of gold was $1,314 per ounce.
On Wednesday, 9th of May, market participants closely followed the developments on the international arena. The head of the U.S. state announced the U.S. exit from the Iranian nuclear deal. The actions of the president threaten Iran with crippling sanctions. Trump warned that if any country continues further cooperation with Iran, the sanctions will affect those countries too. Many economists and politicians consider D. Trump's decision to be premature and rash, as it can lead to undesirable consequences.
Former U.S. Secretary of State John Kerry:
"The announcement [of Trump] weakens our security, violates America's promise, isolates us from our European allies, expose Israel to increased risks, strengthens Iran's conservative view supporters…"
Against the backdrop of international tensions, the dollar has strengthened its positions.
On the 9th of May, the price of gold was $1,312 per ounce.
The final consequences of Trump's decisions will affect the market sentiment in the next few days.
On Thursday, 10th of May, the European Bank for Reconstruction and Development (EBRD) announced the positive outlook for the 2018 economic growth in its report. The Board of the European Central Bank noted the increase of inflation in the eurozone countries, predicting a further increase.
On the 10th of May, owing to the straightening of the euro currency, the price of an ounce of gold amounted to $1,321.
On Friday, 11th of May, experts noted a crucial shift in the increase of the yellow metal’s price.
A survey of economists, conducted by the American business newspaper Wall St Journal, showed that 98% of respondents are confident of the next increase in interest rates happening in June. Most of them are convinced that the Fed will tighten its policy.
On Friday, the price of gold stopped at the $1,318 an ounce mark.
According to Tom Brady, chief economist at Newmont Mining, there is still a considerable interest in gold.
Brady noted that in order for gold to break out of its current trading price range, a growth of economic uncertainty and geopolitical risks will have to capture the attention of investors.
"We have reached the high level of economic uncertainty in the U.S. and abroad, and this really continues to boost investor’s interest in safe harbor and gold."
On Monday, 14th of May, the price of the U.S. currency was impacted by the consumer price index data in the U.S. In addition, the euro currency cannot consolidate its position due to the unstable situation in Italy.
Masafumi Yamamoto, chief currency strategist for Mizuho Securities in Tokyo:
"The euro is likely to continue its modest growth following a temporary decline of the dollar. Yet the uncertainty about Italian politics... will limit the euro currency."
On Monday, the price of gold amounted to $1,319 per ounce.
According to GFMS metal analysts at Thomson Reuters, the uncertainty of the market will add great benefits to gold in 2018. The prospects of a further growth in gold prices are mentioned in the Gold Report for the current year.
Prices of gold are estimated at an average price of $1,360 per ounce, and can potentially reach $1,500 per ounce, notes Alexander Cameron, Metals Demand Director at GFMS Thomson Reuters.
"There is an ongoing uncertainty in President Trump's policy, a constant tension in the negotiations with the Middle East and Brexit. These events will become the main drivers of gold prices this year, " said Alexander.
According to GFMS forecast, if any of such risks materialize, then gold will significantly strengthen its positions over five years.
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