dollar, money, us-dollar

Gold Price Remains Neutral Despite Fed Delaying Interest Hike Until 2024

Similar to several other markets, gold is not performing too well lately. With Black Friday around the corner, some will take advantage of discounted prices. The bigger question is whether or not there will be some recourse before the year comes to an end. 

Gold Remains Discounted

Despite having a very strong year, bullion struggles to end 2020 on a high note. It still has a solid performance over the past 11 months, but many investors had hoped for more. Unfortunately, a big “bang” to end the year has become less likely for gold. Hovering near $1,800 will pose its own set of challenges. 

That being said, there are still factors at play that offer hope. The US Federal Reserve has confirmed it will not touch the current interest rates. Instead, keeping money in a bank account remains subject to a 0% interest rate, assuming it doesn’t head into negative territory early next year.  Despite its best efforts, it is unlikely the Fed will avoid negative rates for much longer.

What makes this announcement intriguing is how it contracts the outlook of 2 months ago. In September, the Fed indicated interest rates would be hiked by 2023. That plan has been revised in quick succession. A further testament to the trouble the American economy finds itself in today.

All things considered, that news is positive for gold, silver, and other precious metals. There is no valid reason to stockpile money in a savings account. Instead, it is better to begin investing and create a diversified portfolio. Gold still offers price appreciation appeal, as $2,300 per ounce is expected to be hit next year. 

Other Markets Are Subdued as Well

Looking beyond interest rates and precious metals, the remaining markets don’t look great. Crude oil is drifting lower again after hitting a recent high. Not entirely surprising, as the global demand for oil is far from where it would be otherwise. COVID-19 will ensure that situation remains unchanged for some time to come.

Even equities are not showing any desire to move higher. Somewhat surprising, as European equities recently hit a 9-month high. That rally may have been filled with too much optimism, and that market is likely to see a steep correction next week. 

Even Bitcoin is not performing all that well anymore. Despite gaining thousands of dollars in value over the past few weeks, the bulls have run out of steam. Bitcoin currently trades near $16,500, despite hitting $19,300 earlier this week. A recovery currently seems unlikely, but anything is possible. 

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