Gold Price Has Been On A Tear Lately

Gold price has been on a tear lately, and many investors are wondering if the Federal Reserve is behind the move. While the Fed doesn’t officially set the gold price, it does have a lot of influence over it. Here’s what you need to know about the Fed and gold.

Gold prices have been on a roller coaster ride lately, and many experts believe that the ups and downs are far from over. Federal Open Market Committee (FOMC) is widely expected to raise interest rates soon, which could send gold prices soaring or tumbling depending on how the market reacts. So, if you’re thinking of investing in gold, buckle up and get ready for some more volatility.

Gold prices spiked upwards after the most recent US CPI announcement came in lower than what analysts had predicted. And while a zero change might not sound like much, it’s actually good news because it indicates that prices are stable.

Despite some core measures staying strong, headline inflation rates are still well above the Federal Reserve’s target. While falling gasoline prices are certainly welcome, food and shelter costs continuing to rise is cause for concern. Inflation does not appear to be slowing down any time soon.

Gold’s rise was followed by a period of lower prices, even as the USD remained weak. Fed spokespeople (today it was Evans and Kashkari) warned that Fed rates are still headed higher, this year and next. This had no positive effect on gold prices.

I really hope I’m wrong about the ‘eye-watering’ path ahead for the FOMC, but I don’t think I will be.