Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
The Federal Reserve announced, as expected, that it would keep its policy rate in the 5.25% to 5.50% range on Wednesday after a two-day meeting. Fed Chairman Jerome Powell said at the press conference that it would take longer than originally expected to gain confidence on the issue of rate cuts, and that short-term inflation expectations had risen, but that the next step was unlikely to be a rate hike.
The Fed has kept interest rates in their current range since July last year due to a series of data suggesting lingering upward price pressures in the U.S. economy. It is worth pointing out that the Fed statement retained language on future rate cuts, suggesting that the easing bias remains.
After the Fed’s decision was announced, U.S. stocks widened their gains, bond yields and the dollar deepened their declines, and the price of gold rose 1.8 per cent during the session, before parring some gains.
Bart Melek, global head of commodities strategy at TD Securities, said the lack of implied monetary policy tightening in the statement was a relief to gold investors. Traders continue to believe several rate cuts during the year, especially in the second half. Investors are also looking for a hedge from the precious metal against sticky inflation.
So far, the price of gold has climbed about 12 per cent and hit a record high last month. Gold’s rise over the past two months has been linked to central bank purchases, strong demand from Asian markets, particularly China, and heightened geopolitical tensions from Ukraine to the Middle East.
The price of gold was up 1.3 per cent at $2,314.99 an ounce by Wednesday’s close. Silver prices also rose, while the Bloomberg Dollar Spot Index fell 0.2 per cent.
On Friday (May 3), the U.S. Bureau of Labor will release its employment report for April. If the increase in US non-farm payrolls falls significantly (for example, the figure drops to close to 150,000), it could trigger a sell-off in the US dollar and trigger an immediate reaction in gold prices. On the other hand, a stronger-than-expected growth in non-farm payrolls, especially if the payroll inflation data is hot, could intensify expectations of no action by the Fed in September and could put further pressure on gold, which is already in a phase of adjustment.
