SPDR Gold Trust (ETF) fell two percent, closing at $17.87 per share, down from today’s opening price of $120.28. Gold priced at $1234 by market close today, down from a close of $1259 the prior week. Decline in price may be attributed to investor selloff, who may be looking to cash-in on profits prior to potential volatility from unpredictable announcements from the Federal Reserve’s Two-day Federal Open Market Committee meeting, scheduled for March 15-16 at 2:00 p.m. ET.
The FOMC meeting will be shedding light on whether the Fed plans to raise federal deposit rates, although, market consensus seems to expect little or no upward movement on near term rates due to world financial market volatility, including the European Central Bank’s recent move towards looser monetary policy and renewed quantitative easing.
The future price of gold is greatly debated between those who are bear or bull on the precious metal. On February 16th, Goldman Sachs analyst stated that it expects the Fed to rates to increase, bringing the 12 month gold price target down to $1,000. In the other hand, those tagged with being “doom & gloomers” have been bullish on gold, pointing out a near term rush to safe-haven investments in the event of a bursting world economic bubble.
The Bank for International Settlements stated in a March 4th publication that “The Federal Reserve’s interest rate lift-off in December did little to disturb the uneasy calm that had reigned in financial markets in late 2015.” and warned of the deterioration of global growth prospects.
Contrary reports highlighting positive economic growth and stability, including a report from the Bureau of Labor Statistics, which reported 242,000 new jobs created in February 2016.
The coming Fed announcements should settle some near term debate, but may raise new questions moving forward.