BullionVault, St. Louis Fed, LBMA
Gold
The above table from Adrian Ash, head of research at BullionVault, tracks gold’s
GCZ5, -0.01% percentage price-change over the three months before each previous rate-hike cycle begins, over the first three months after it starts, and over each cycle’s first 12 months, with average outcomes at the bottom, plus the average data for the entire period since 1970.
“If the central bank sends out a dovish signal on Thursday, this may help to boost stocks and undermine the dollar,” said Fawad Razaqzada, technical analyst at Forex.com, in a Monday note.
Under that scenario, “gold may benefit as lower rates for longer would decrease the relative opportunity cost for holding the metal,” he said. But the “likely ‘risk-on’ trade may mean that investors will pay less attention to gold and allocate more of their trading capital into equities.”
On the other hand, if the Fed decides to send out a more hawkish message, including a rate increase, “this may help unpin the dollar and undermine both stocks and buck-denominated gold,” said Razaqzada. So under both scenarios, “the upside appears to be limited for gold—unless of course we see massive drops in both equities and the dollar later in the week,” he said.
—Myra P. Saefong
MarketWatch.com