Gold Pares Gains after Fed Chair Janet Yellen’s Comments Posted by Brian Ford on March 30, 2015
The gold price backtracked on Monday morning after Federal Reserve chair Janet Yellen did some backtracking of her own. Yellen previously indicated that interest rates could rise as early as March or April of 2015, but the Fed boss has now stated that interest rates could rise “later this year.” Gold investors have been hoping for a rise sooner rather than later because rising interest rates historically translated to higher gold prices. As of 11am EST on Monday morning, the gold spot price had fann $12.90 to $1,185 per ounce. The silver spot price fell $0.31 (1.8%) to $16.68 per ounce.
After six years of near-zero interest rates, the job market is still sluggish, with annual hourly wage increases of less than 2%. Stock markets have performed satisfactorily, but some investment analysts are worried that an interest rate increase could negate the gains of the last two years. When the Federal Reserve raised interest rates from 4.5% to 21.5% between 1960 and 1980, stock investors saw the majority of their gains wiped out by inflation.
At a certain point, the Federal Reserve will be forced to raise interest rates no matter how the U.S. economy performs. The minutes from last week’s meeting of Federal Reserve governors did not contain the word “patient,” a change from the last couple of years. For a clearer understanding of how interest rates and the gold spot price are intertwined, claim your free copy of the new Certified Gold Exchange special report, Gold & Silver Smart Moves in 2015, via the form below or by calling “America’s Trusted Source For Gold” toll-free at (800) 300-0715 today.