The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
Gold is trading at $1339, down 1.1%, as traders are expecting the Fed to reduce its bond-buying scheme this evening. At the moment the US central bank is operating a quantitative easing (QE) scheme of $65 billion per month, and the consensus is that it will be lowered to $55 billion.This could push the US dollar higher and, in turn, drive gold lower. Gold is up 11% year-to-date, so it is no surprise we have seen profit-taking ahead of the meeting.
Gold was around $1330 before the tensions arose in Ukraine, and it approached the $1390 level at the start of the week. The situation in Crimea is far from over, and if military intervention becomes more likely we could see gold rally.
Janet Yellen has not tapered the QE scheme yet during her tenure. If she decides to leave it unchanged, we could see gold head towards the $1350 mark.