After a spectacular run in the first half of the year, gold prices have been range bound since. It’s been just another follow-up month where lower-than-expected economic data was overshadowed by hawkish Fed talk. Eventually, the Federal Reserve dashed all hopes of higher rates and decided to stay put on interest rates to watch for additional evidence of economic recovery without giving more specifics. This helped gold prices to more than recover earlier losses and end at $1315.75 an ounce, a gain of 0.5% for the month. Gold prices have been hovering within a broad range of $1300-1400 an ounce and the YTD gains now stand at 24%.

 The Federal Reserve began the year projecting four rate hikes; however after the first rate hike in December, the Fed remained on hold time and again this year because of economic circumstances in the U.S. and abroad. Such a significant change of plans and conflicting signals continue to undermine the Fed’s credibility in the eyes of the investors. The revised median forecast from Fed officials projects one rate hike this year.  For More Information RipplesAdvisory,Ripples_Advisory,Ripples Market Tips Ripplesadvisory.com and you can call us on :-9827808090.

That would be a pretty strong calendar-based signal of their intentions. Given there are only a few months left in the year, they have to be pretty confident about the outlook to send such a signal, which raises the question that if the Fed is indeed so confident, why not hike rates now? Right now, the target rate is between 0.25 and 0.50. Effectively, it is at 0.40. A quarter point hike would effectively make it 0.65. If the Fed believes that a rate of 0.65 will have a profound negative impact on the economy then we have larger problems.