Jakarta, CNBC Indonesia – World gold prices moved up in trading this morning. The results of the United States (US) central bank meeting have more or less a positive impact on the price of the precious metal.
On Thursday (29/7/2021) at 07:14 WIB, the world gold price on the spot market was recorded at US$ 1,806.78/troy ounce. Up 0.1% from the previous day.
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In the early hours of Indonesia time, the US central bank (The Federal Reserve/The Fed) announced the results of its monthly meeting. As expected, Chairman Jerome ‘Jay’ Powell and his colleagues decided to keep the benchmark interest rate at 0-0.25%. The Fed also maintains the amount of securities purchases (quantitative easing) which is US$ 120 billion per month.
In a press conference after the meeting, Powell reiterated that the Fed would not be in a hurry to ‘pull the switch’. Although Powell sees the US economic recovery is still running on the right track, but he wants to make sure the labor market rises first.
“I would like to see strong employment figures in the next few months before reducing the amount of asset purchases,” said Powell, as quoted by Reuters.
Coronavirus pandemic (Coronavirus Disease-2019/Covid-19), continued Powell, is indeed a big risk for the economy of Uncle Sam’s country. Moreover, now there is a delta variant that is more easily transmitted than before. But Powell believes that the US has learned a lot when it comes to handling the pandemic.
“(The delta variant coronavirus) will have tremendous health consequences. However, from previous waves of coronavirus attacks, it appears that the economic impact is diminishing.
It looks like we’ve learned how to handle the pandemic with less economic impact. With vaccinations and policy support, economic and employment indicators will continue to improve,” said Powell.
The Fed’s attitude that has not given a clear signal about policy tightening (tapering off) made the US dollar lose its grip. No clarity on when the Fed will reduce ‘dose’ quantitative easing, then the supply of US dollars will continue to be abundant so that the ‘price’ becomes cheap.
At 07:28 WIB, the Dollar Index (which measures the position of greenback against six major world currencies) weakened 0.07%. The depreciation of the country’s superpower currency is the driving force for the increase in gold prices.
Yes, the US dollar and gold prices have an inverse relationship. This is because gold is an asset that is priced in US dollars.
When the US dollar weakens, gold becomes cheaper for investors holding other currencies. The demand for gold rises, the price also rises.
Next Page –> Gold Prices Can Still Rise Again
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