Gold historically a safe haven in times of inflation and uncertainty
Gold dipped on Thursday as the Fed gave an indication it could rise interest rates, while positive news emerged regarding Evergrande in China.
Spot gold is down to $1,751.03 at the time of writing, as are US gold futures.
The dollar is down by 0.52% against a basket of currencies as Jerome Powell hinted that tapering may soon be on the menu.
“Until something more concrete happens in terms of direction for the dollar, gold will be impacted more by the level of risk appetite or risk aversion,” said Powell.
Generally speaking, a weaker dollar is good for gold’s appeal, as it is considered a hedge against inflation and political instability.
“Higher rates usually do impact gold negatively, (but)investors will almost have a foot in gold’s door as a precaution given the continuing bubble in the equities and bond market,” said Vincent Tie, sales manager at Singapore dealer, Silver Bullion.
However, while gold has not been having the best of times over the past few months, over a longer period it has been on an upwards trajectory.
Gold could face pressure in the short-term, said domestic brokerage Geojit, who thinks major rallies are seen only a close above $1815.
