UNITED STATES March 17 2016 9:53 PM
NEW YORK (Scrap Register): Gold remains sharply higher after perceived dovishness from the Federal Open Market Committee Wednesday, although some near-term profit-taking may cause the rally to fade after the sharp run-up in prices, said Mitsubishi.
The Fed left U.S. interest rates unchanged, as expected. The gains in gold were largely attributed to the individual projections of Fed members, which collectively show policymakers now expect to hike rates only twice this year, rather than the four increases seen back in December, Mitsubishi explained.
“This once again confirms the ‘lower for longer’ outlook for U.S. rates and suggests an environment in which the opportunity cost of holding non-yielding precious-metals investments is extremely low,” Mitsubishi added.
The firm also reported, “The technical reversal at the lows of $1,230 today -- 23.6% Fibonacci retracement of January low to March high -- confirms that gold’s bull run is intact, although we may see some near-term profit taking/rally fade after the recent sharp move higher.”