Gold spot price surged $33.51 or 1.7% on Tuesday and soared comfortably above the $2,000 level to $2016
Gold spot price surged $33.51 or 1.7% on Tuesday and soared comfortably above the $2,000 level to $2016. The yellow metal gained further push owing to the current turmoil in banking shares; however, uncertainty before the Fed meeting resulted in limited gains.
The bullion demand was also supported by the Fed’s likely pause in interest rates after the May hike, coupled with fears about U.S. debt default with June 1st being the deadline (without debt ceiling hike). With the Fed most likely to increase the interest rate by another 25 basis points, interest rates will reach a peak of 5.25% in the last 40 years, versus inflation trending at 4.0-5.0%. The macro data has shown enough signs to warrant a pause in interest rates; however, inflation remaining at higher levels will keep the Fed at check regarding future rate hikes.
Sunil Kumar Dixit, chief technical strategist at SKCharting.com said, “We have seen gold reclaiming its recent high of $2,015, and going forward this paves the way for a retesting of the swing high of $2,048 and the next challenge at $2,055.” If the Fed announces or signals a pause in the interest rates, the yellow metal and other non-yielding assets could see increased backing.
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