Gold in holding pattern pattern
Saxo Bank’s Hansen says first rate hike often signals ‘low point in gold’

(USAGOLD – 3/16/2022) – Gold is in a holding pattern this morning as it awaits the results of two meetings of great significance: the Russia-Ukraine ceasefire talks and the Fed’s rate deliberations. It is up $2.50 at $1925. Silver is up 6¢ at $25.07. Today’s pause follows a sharp, week-long decline in which both metals gave up a large portion of their war premium. As for the Fed’s rate deliberations, the markets have pretty much factored in a quarter-point increase. What they have not factored in is Fed intentions with respect to the future – its underlying tone and any outright signals that might come as a result of its concluding press conference.

“The first rate hike move from the U.S.,” says Saxo Bank’s Ole Hansen in a CNBC report this morning, “quite often signals a low point in gold, so we’ll see what kind of signal they send tomorrow, and how hawkish their statement is, which will probably determine the short-term outlook from here.”

(In the chart below, please note the beginning of upcycles coincident with more hawkish rate policy launches in 2004 and 2016.)

Fed Funds Rate – Gold Price

Source: tradingeconomics.com