Gold trades close to $1930 ahead of FOMC meeting
On Wednesday, January 25, gold prices stabilized at their highest level in nine months. Increased demand for the precious metal as well as a corresponding rise in prices were caused by fears of a recession. Many investors consider gold a defensive asset.
The rise in prices for the precious metal followed a fall in stock markets. Demand for the safe-haven asset exceeded the U.S. dollar’s demand, as the Federal Reserve (Fed) is expected to slow down the pace of rate hikes in the near term.
Fears of an economic downturn have also intensified after recent losses in Wall Street and a string of weak corporate reports that followed them. Altogether, these factors have had an impact on demand and prices for gold.
This week markets are focused on the U.S. GDP data for the fourth quarter. This information will help to assess the extent to which economic growth slowed by the end of last year when the consequences of aggressive rate hikes were already more tangible.
The results of the first meeting of the U.S. Federal Open Market Committee (FOMC) in 2023 will be in focus next week.
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Demand for gold surged to an 11-year high last year. This is due to large-scale purchases on the back of high activity by retail investors and a slowdown of ETF outflows.
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