Essentially, gold went up because the new Fed Chair, Kevin Warsh, didn't sound as scary as investors expected yesterday.
Before his speech, investors were worried he would announce aggressive plans to hike interest rates. Instead, he said two things that made the market breathe a sigh of relief:
Inflation risks are coming down: He admitted that price spikes are finally cooling off.
No promises on rate hikes: He refused to say whether they will raise interest rates at the next meeting, meaning there is no rush to do so.
Why this made people buy gold:
High interest rates are bad for gold. Because Warsh hinted that rates might not shoot up immediately, the US dollar weakened, and investors rushed to buy gold as a safe bet, pushing its price up by over 2%.
Before his speech, investors were worried he would announce aggressive plans to hike interest rates. Instead, he said two things that made the market breathe a sigh of relief:
Inflation risks are coming down: He admitted that price spikes are finally cooling off.
No promises on rate hikes: He refused to say whether they will raise interest rates at the next meeting, meaning there is no rush to do so.
Why this made people buy gold:
High interest rates are bad for gold. Because Warsh hinted that rates might not shoot up immediately, the US dollar weakened, and investors rushed to buy gold as a safe bet, pushing its price up by over 2%.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.