Gold bullion and related exchange traded funds were heading toward their fifth consecutive day of gains on Wednesday, as the markets digested the Federal Reserve’s latest minutes.
Gold has been gaining strength on increased demand in safe-haven buying and muted moves in the U.S. dollar.
“Gold edged higher during early Wednesday trading, with the gains attributable to some dollar weakness in the runup to the publication of the latest FOMC minutes, as well as a drop in risk appetite,” Ricardo Evangelista, senior analyst at ActivTrades, said in a daily note, MarketWatch reports.
During its June policy-setting meeting, policymakers at the U.S. central bank unanimously voted to hold the benchmark federal funds rate at a range between 0% and 0.25% and to keep purchasing $120 billion in bonds each month, Fox Business reports.
Market observers widely anticipate the Fed to provide more details into the timing of a potential tapering event when central bankers meet again in August at their annual retreat in Jackson Hole, Wyoming.
“If the U.S. economic recovery continues to accelerate to a sufficiently robust level into the summer, the Fed is expected to signal rolling back its asset purchases later this year,” Mark Haefele, UBS Global Wealth Management’s CIO, told Fox. “But the actual tapering would only take place in 2022, and we believe markets have largely priced in this expectation.”
The gold markets have also triggered a bullish technical indicator after forming a golden cross. Gold prices and GLD price movements now show their short-term 50-day moving average crossing back above the long-term 200-day moving average, an indicator of a bullish long-term uptrend formation.
Looking ahead, the ongoing cheap money environment and a weak U.S. dollar could continue to support the gold market.
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