Last week, the price of the coveted metal surpassed the threshold of 2,200 dollars per ounce. “We observed significant fluctuations in the gold market, largely due to the decisions of central banks,” comments Michał Tekliński, an expert at Goldsaver.pl.
Last week marked another record for the gold price, which on Thursday, March 21, rose above the threshold of 2,200 dollars per ounce. This is primarily the result of information from the US economy and the decision of the Federal Reserve, or rather its lack of decision regarding interest rate cuts.
“The FED announced that nothing changes in its policy and this year we will probably deal with three interest rate cuts in the US. The first one is expected in June – currently, according to FedWatch Tool, its probability is over 68%. Contrary to earlier predictions, the cut did not take place in March, and – as we saw – the market immediately reacted to this: the dollar weakened, and the price of gold skyrocketed upwards” – comments Michał Tekliński, a gold market expert, Goldsaver.pl.
The following day, however, more data arrived from the US, indicating that in February, real estate sales were much better than expected by the markets.
–This, in turn, led to a correction, resulting in gold maintaining its record level for only one day. It then fell to a level only slightly higher than at the beginning of the week. It clearly indicates that we can expect significant volatility in this market in the coming months, underlied by a significant amount of uncertainty about the FED’s further decisions – predicts Tekliński.
Switzerland cuts rates, Japan raises them, and in Poland they want a dismissal
Important decisions were also made by other central banks. Switzerland, for the first time in 9 years, cut interest rates, which was a surprise to the market and significantly weakened the Swiss franc, also affecting the price of gold.
–This was the first of the developed economies whose central bank decided to take such a step. Although a cut of 25 basis points is not a drastic reduction, the fact that this happened for the first time in so many years is a significant event. The Swiss National Bank recognized that the inflation situation is stable enough to allow more money to flow into the market – explains the Goldsaver.pl expert
An even more surprising piece of news was the first interest rate hike in Japan in 17 years. And this may herald further, significant changes.
–“For the past several years, interest rates in Japan have been negative, so although increasing them to the level of 0-0.1% is not particularly dramatic, as a prediction of further increases, it can cause quite a stir on the global financial markets” – forecasts Michał Tekliński.
As Goldsaver’s expert points out, so far, the Japanese have been the largest exporters of currency outside their country – they hold bonds both in the US and the European Central Bank.
–“So far, buying bonds in Japan – due to negative interest rates – has not been profitable. However, if the Japanese central bank continues to raise rates, this could cause a return of capital to the Land of the Rising Sun. The Japanese will sell bonds of other countries in order to buy domestic ones, which may significantly change the situation on the world’s financial markets,” adds Tekliński.
A lot has also been happening around the National Bank of Poland. However, it’s not about the decisions of the NBP itself, but about its head, whom the new government intends to bring before the State Tribunal. A request was sent to the Marshal of the Sejm containing 8 charges concerning Adam Glapiński’s violation of the provisions of the Constitution of the Republic of Poland and laws.
–“In this way, the coalition wants Glapiński to be dismissed. However, it is unknown whether this will happen. It’s a long process, and some of the charges – according to analysts – are quite debatable. It will certainly not be without impact on the dynamics of the relationship between the NBP and the government. Adam Glapiński is already beginning to send peaceful signals to Prime Minister Donald Tusk in order to cool down emotions” – summarizes the Goldsaver.pl expert.
