Gold Prices Rise on Further Signs of Less Aggressive Fed Rate Hike Plans

(November 21, 2018 - investing.com)

Investing.com - Gold prices rose on Wednesday on the back of further speculation that the Federal Reserve may take a less aggressive stance on policy tightening, while tension over trade issues between the U.S. and China continued to provide support for the precious metal.

MNI, citing “senior people at the Fed” said that the central bank will consider a pause to the rate hikes cycle as early as spring. They said that a rate hike in December is all but a done deal, but indicated that the debate will become more lively beginning in March and certainly by June.

Fed Chairman Jerome Powell warned last week of slowing demand abroad, fading fiscal stimulus at home and the lagged economic impact of the Fed’s past rate increases, suggesting that a pause in tightening may well come in 2019.

Adding to that interpretation, Fed Vice Chairman Richard Clarida told CNBC last Friday that the rates were currently near neutral levels, while Dallas Fed President Robert Kaplan also said that he expected a growth slowdown in Europe and China.

A slower pace of interest rate increases would lessen the pressure on non-yielding bullion.

Ongoing trade tension between the world’s two largest economies also increased interest in the safe haven metal. In a 53-page report released on Tuesday, U.S. Trade Representative Robert Lighthizer’s office accused China of a state-backed campaign of intellectual property and technology theft.

Hopes have been fading of any agreement between U.S. President Donald Trump Chinese counterpart Xi Jinping at the G20 leaders' summit later this month in Argentina.