25th March 2015
Gold’s five-day rally paused for breath on Wednesday and edged down from a two-and-a-half week high.
The price of the precious metal was driven higher following last week’s cautious tone from the US Federal Reserve, where the bank was more dovish than expected.
Traders had been hoping for interest rates to be hiked as early as June, and their disappointment saw investors flock to the safe-haven of gold.
Gold prices now range just below the $1,200 handle and many experts believe a challenge of this level is coming.
As expectations for an interest rate increase have been shifted to later in the year, traders repositioned themselves and prompted a sell-off in the US dollar. A lower dollar makes bullion cheaper for investors that hold other currencies, which adds to demand.
Furthermore, gold’s allure is boosted by global uncertainties, such as the chance of Greece exiting the euro, which experts say is 50-50.
If approval for Greece’s reform package fails to be granted, which is due to be delivered on Monday, it will likely prompt a flight-to-safety and boost demand for gold.
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