Gold Rose on FOMC Member’s Comment -
  • In a week (07/05 – 11/05) the price of ICDX’s Gold rose 0.49%.
  • The price was supported by investor expectation on slower interest rate hike.

Market Review

Last week, gold price rose because investors predicted US Fed would slow their interest rate hikes on the USD. St. Louis Fed Reserve Bank President James Bullard spoke on Friday about this issue, and stated that interest rate had already reached a neutral level so further increase is not necessarilly going to stimulate the economy.

The statement imposed had a positive impact on gold price, as gold price historically had negative correlation to USD. Whereas when dollar goes up gold price goes down, and vice versa. On the other hand, gold price rose was withheld a little due to US Secretary of State Mike Pompeo statement on Sunday that US would agree to lift sanctions on North Korea if they agree to completely dismantle their nuclear programs.

Another support to gold price last week was the report from SPDR Gold Trust that stated their holdings fell 0.62% to 857.64 tonnes on Friday from 862.95 tonnes on Thursday. Meanwhile the gold investors were steadied after China reported to maintain its neutral monetary policy and is planning to keep liquidity and credit growth steady while closely monitoring the Yuan.

Gold Rose on FOMC Member’s Comment Chart -

Price Performance Indicators

Previous Week % Change
GOLDUD $ 1,319.40 +0.40%
GOLDID $ 1,319.40 +0.40%
GOLDGR Rp 600,600 +0.67%
XAUUSD $ 1,319.30 +0.39%
USD/IDR IDR 13,943 +0.46%
COMEX $ 1,320.70 +0.50%
USD/IDR Rp 14,048 +0.66%

Market View

Will the U.S. Rate Hike Being Halted or Continued ?

Until now, the CME’s probabilities on June Meeting is accounted at 100% on which the rate will rise to 1.75-2.00% after steadied in 1.50-1.75% since March meeting. Note that, last week, James Bullard, was against any further rate hike because current rate is considered to have reached a neutral level that further hike is unlikely going to stimulate the economy. Any issues turning down the possibilities of rate hike, will have a chance to support the gold price, while positive issue will limit the gold price rise.

U.S Low Economic Data

This week, economic data that needs to be considered as highly correlated to USD and gold are U.S retail sales and U.S. building permits, these data are expected to show a slower changes, as compared to previous reports. With this low economic data, pay attention to geopolitical concern such as the Iran nuclear and sanctions on North Korea, which could drive the gold price this week.


Date Data/Events Actual Expectation Previous
15/Mei U.S. – Retail Sales (May) 0.40% 0.60%
16/Mei U.S. – Building Permits (May) 1.35M 1.35M
16/Mei U.S. – FOMC Member Bostic Speaks
18/Mei U.S. – FOMC Member Mester Speaks

Source: ICDX Research