The gold price is continuing its downtrend in todays trading session, spurred on by yesterday’s interest rate decision from the US Federal Reserve where rates were left on hold.
Many saw this as an opportunity for the precious metal with rates remaining at current levels but it wasn’t to be after the following statement from the Fed where they noted that the US economy was moving along nicely and although there was no hike in rates this time around, the market should brace itself for more.
The statement well and truly left the door open for a further rate hike in December, which is what caused a selloff in gold.
"Gold is unquestionably dollar-watching, and by extension looking at the (interest) rates," said Ross Norman, chief executive officer of Sharps Pixley.
"The market is drifting a little lower today on expectations of further rate hikes. If the rates go higher, it is a slightly negative story for gold." He added.
The gold price may receive some support as a safe haven asset on the back of the US midterm elections which caused a huge division I the US government with republicans remaining in control of the senate while the newly elected opposition democratic party regained power in the house of representatives.
This situation may put many of President Donald Trump’s US dollar friendly policies on hold, as he won’t have the numbers to pass legislation, which may cause weakness in the greenback while at the same time benefiting gold.