The prices of gold increased on Wednesday. It was caused by the Dollar stepback although the increase is still controllable after a statement made by Janet Yelled some days ago.

For your information, she is the Finance minister of the United States. She stated before that the interest rate may needs to be increased. Because of that announcement, gold price is now higher. 

Based on the data, the gold spot increased by 0.25% and became $1.782 per ounce. The united States future was also up for about 0.4 percent and reached the $1.783 level. Below is the detail.

The USD Stepback Supports the Gold Price

The dollar stepback are wider after a strong sale happened last night. In fact, that situation creates several changes in the market. The biggest one is that the stepback really supports the gold prices. 

That is announced by an analyst from the IG market. She said that a quite strong resistance zone will be formed. The amount is between $1.800 and $1.810. How if the price penetrates there? 

If that thing happened, you can see some buyers there. On Tuesday, the prices of gold were decreased by more than 1%. It was after Yellen stated that she doesn’t see any possibilities for inflation. 

That statement was underrated a statement before that the interest rate increase may be needed to stop the hot economic. The cause is the spending plan created by Joe Biden. 

The Higher Interest Rate and Its Impact

The plan made by Joe Biden is hoped to become an effective way to support the growth. However, the higher interest rate decreases the appeal of gold. How can that happen? 

It is because that condition can increase the possibility to hold the gold bullion which is not giving any results. That is why; the investors may have the different focuses in the future. 

Many parties predicted that they will be more focused on the April salary data that will be released on Friday. It becomes a further sign about how healthy the US economic is amidst the pandemic. 

So far, Jerome Powell as the leader of the Federal Reserve gives his opinion. He thought that the employment market is still far from the needs to talk about the asset purchase reduction. 

Meanwhile, The Australian Dollar Is Quite Tame

Elsewhere, the Australian dollar is having the different trend. That currency is quite tame or stable. It is especially after the announcement of the RBA monetary policy in May which is quite surprising. 

That passes the wire. Many people have already widely anticipated that the cash interest rate target and obligation return owned by Government in 3 years will be not changed in 0.1 percent. 

The thing which seems giving a life from Aussie is the newest news from the Central Bank. They will not consider a further extension from their future fund facilities made before.

Furthermore, the members also don’t see any condition for the Benchmark loan interest rate. That decision may be taken until 2024 for the quickest period. On July, the central bank can have a different consideration. 

The Interest Rate Target Can Be Changed

On July, maybe the central bank will change the 3-year interest rate to become the obligation form in November 2024 from the April period know the same year or not. The RBA also lets their door opened. 

It is especially for the obligation purchase to fill the inflation and its work target. However, there is one more thing which can avoid the Aussie to increase. It is a fact that the Central bank offers a possibility. 

The topic is a further easing if it is needed. The first quarter CPI report was so soft last week. That could trigger the expectation and at the same time the Central Bank also underrated the inflation.