Gold has pushed higher in today’s trading session after the release of key data from the US and a shock move by US President Donald Trump to dismiss his secretary of State.
Inflation figures released from the US some hours ago hit the market at 1.8 percent, which was largely in line with expectations but still below the Fed’s target rate of 2 percent which many agree is the benchmark for a more aggressive rate hiking cycle.
Although a rate hike this month is fully priced in to the market, the amount of rate hikes for the rest of the year is now in doubt and this could lend some support to the gold price as the year unfolds.
“Although inflation appears to be improving, it has remained well below target for an extended period of time, and we anticipate that the Fed will not be keen to increase real rates aggressively,” said Bart Melek, head of commodity strategy with TD Securities.
“As such, money managers have been reluctant to reduce their exposure to the shiny metal, and with a ‘go-slow’ approach from the Fed, we could very well head back above $1,350 in the latter half of the year.” he added
In a move that caught the world by surprise, US President Donald Trump has fired secretary of State Rex Tillerson and replaced him with the CIA Director Mike Pompeo and has recommended that Gina Haspel to lead the CIA which will mark the first ever woman to head the agency.
Gold benefited on the news as the move adds more instability to the current presidential administration and it seems as those Trump has very few friends left as Tillerson is one of a number of people who have left the Trump administration in recent times
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