After rises throughout 2018, speculation is currently mounting that the Federal Reserve will pause interest rate hikes in the beginning of 2019.
But what could this mean for the future of gold?
Although the relationship between interest rates and precious metals is not a constant one, and sometimes can move in opposite directions, if the Fed do hit the pause button on interest rate hikes, there’s a good chance that gold could possibly heat up.
Did you see the news story last week? The one where scientists succeeded at melting gold at room temperature? This was a phenomenon where scientists from Sweden and Finland were trying to see how gold atoms behave under the highest magnification of an electron microscope, and accidentally discovered that the top layers of the gold fragment were melting at room temperature. Gold’s melting point is known to be an extreme 1,064.18 degrees Celsius!
This was a truly ground-breaking and extraordinary phenomenon, which just shows how our favourite precious metal can still surprise us!
In the News
I’m sure you know, eyes were fixed on the G20 summit this weekend, as US President Donald Trump and China’s Xi Jinping discussed the trade war between China & the US. The two countries declared suspension of any new tariffs, and declared it a ‘highly successful meeting’, as the principal agreement looks to have prevented any more friction. With no tariff hikes in the new year to come, we may see a strong increase in gold buying.
The dollar remained strong throughout the summit as investors seemed to trust that the US had less to lose in the war. Yet, if that interest rate pause button is indeed hit in 2019 – the dollar could come under severe pressure.
Cue to Buy?
Not only could we have this possible pause on interest rate hikes, the ongoing Brexit negotiations also look to hugely affect the markets. The pound is currently stable, but most analysts are suggesting that this looks to be a temporary reprieve as tension rages beneath the surface.
With a possible unstable pound and the dollar under pressure, could this be a cue to buy Gold now? Could this mean good things for gold investors in the new year?
Only time will tell.