Prices on the precious metals market continue to sink on Thursday morning. The decline in the prices has been observed for the past few weeks, and the current decline was due to a fairly good strengthening of the US dollar. The rise in the dollar, in turn, is provided by the results of the meeting of the US Federal Reserve System, which were summed up on Wednesday evening.
Gold futures contracts for February delivery on the trading floor in New York fell 0.5% or $9.35, to $1835.55 per troy ounce. At the same time, support for the precious metal amounted to $1828.4 per troy ounce, and resistance at $1870.8 per troy ounce.
Silver futures contracts for March delivery is also moving in the opposite direction, dropping 0.9%, to $25.16 per troy ounce.
Copper futures contracts for delivery in March supports the negative trend and sank 0.04%, to $3.5455 per pound.
The US dollar strengthened well against the main currencies of the world, which immediately affected the mood of participants in the precious metals market. Recall that the growth of the dollar leads to an increase in the cost of precious metals for holders of foreign currency, which, of course, forces them to abandon possible purchases of gold or silver. Thus, metals continue to experience difficulties that are no longer so easy to overcome.
Gold also reacted sharply to the results of the US Federal Reserve meeting. As experts expected, the main regulator did not make changes to the current monetary policy and so far left everything as it is, but hinted that this situation will soon end and we need to prepare for the tightening of all measures previously ratified as support for the economy of the country affected by the crisis associated with the coronavirus pandemic. One of the main decisions of the Fed was to keep the base interest rate at the same, extremely low level from 0 to 0.25% per annum. Also, it was announced that the purchase of government bonds in the amount of 120 billion per month will take place, which will be a good support to get closer to the targets for the level of inflation and the labor market. Of course, this is not very good news for gold, raising concerns about the opportunities for further growth.
Participants in the precious metals market were frankly upset and began to lose the optimism that they had at the beginning of this year. Investors were particularly upset by the fact that the Fed did not receive any clearer information about the direction of the US monetary policy. If the signals were more distinct, then further forecasts could also be built more clearly.
Thus, gold is now entering a period of consolidation, the end of which is still unknown. However, experts are still speaking exclusively in a positive way about the medium and long-term prospects for precious metals.
