Year-end Rate Hike Once Again Proves To Be Launchpad For Gold Price
By: GoldCore
GoldSeek.com
Thursday, 14 December 2017
– FOMC follows through on much anticipated rate-hike of 0.25%
– Spot gold responds by heading for biggest gain in three weeks, rising by over 1%
– Final meeting for Federal Reserve Chair Janet Yellen
– Yellen does not expect Trump’s tax-cut package to result in significant, strong growth for US economy
– No concern for bitcoin which ‘plays a very small role in the payment system’
There were few surprises yesterday when the Federal Reserve decided to hike rates for the third time this year, by 0.25% to 1.5%. Gold responded with a climb of over 1%.
The statement accompanying the announcement was cautiously optimistic. Two FOMC members dissented whilst Yellen gave comments on Trump’s much lauded tax package and bitcoin.
This was Yellen’s last FOMC announcement as Federal Reserve Chair. As has become her style she was communicative of the Fed’s upcoming plans in terms of normalising monetary policy and the three rate hikes intended for 2018.
Overall Yellen and co are feeling good about how the current Chair is leaving things:
“…the committee expects the labor market to remain strong, with sustained job creation, ample opportunities for workers and rising wages,”
However concern and perhaps surprise was expressed when inflation data came in lower than expected. The reading of 1.7% in the year to November did not hold back the FOMC from increasing their growth projection from 2.1% to 2.5% for 2018.
Gold, defying expectations?
Gold is generally expected to stumble when a rate-hike is announced, or at least do nothing at all given how far in advance these things are telegraphed to the market these days. Once again however gold went against conventional opinion and popped up.
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