And any profits earned have to be translated back into US dollars.
Today’s started with gold at major secular lows, and there’s never been a more-gradual rate-hike cycle at one hike per year..
But just like this year, the Fed won’t hike so aggressively.
Gold’s average gain through In the other 5 in which it lost ground, gold’s average loss was an asymmetrically-small 13.9%.
Gold fared best when it entered Fed-rate-hike cycles low in secular terms and they were gradual.
The dot-plot rate-hike projections are notoriously fickle, and gold actually thrives in rate-hike cycles.
Exactly a year ago, the FOMC staked its zero-interest-rate policy with its first rate hike in 9.5 years.
Gold was again blasted to new post-election lows this week, further trashing contrarian sentiment.
The Fed proved more hawkish than expected in its rate-hike-trajectory forecast, unleashing heavy selling in gold futures.
This catapulted gold bearishness back up to extremes not seen in a year. If the Fed had simply raised its federal-funds rate by 25 basis points to a 0.50%-to-0.75% range, gold-futures speculators would’ve likely yawned. The unexpected hawkishness came in the FOMC’s Summary of Economic Projections that is published quarterly at every other policy meeting.