It going to be a big week for gold starting with tomorrow’s meeting between US president Donald Trump and North Korean President Kim Jong Un which is followed by Wednesday’s interest rate decision from the US Federal Reserve.
The meeting between the two presidents is seen as crucial in securing peace on the Korean peninsula, which hasn’t been seen in many decades.
The big questions is can Trump persuade Kim Jong to give up his nuclear weapons that many say is a big ask, and if the latter balks and doesn’t agree to such a move the meeting is likely to fall apart and gold will once again benefit as a safe haven.
"We have the FOMC coming up and the Trump meeting with Kim Jong Un, so the markets are just watching what's going on. If there's a better risk aversion money will fly into gold." Said Stephen Innes, APAC trading head at OANDA
On Wednesday, the Fed is expected to deliver a 25-point rate hike which is already 100 percent price into the market and hence the gold price so the following monetary statement will be the main driver of the precious metal.
The majority of analysts are expect a bullish statement following the rate decision but some are going against the masses and believe the Fed will have to come clean to the market about the real state of the US economy and may have to proceed with caution in regard to future rate hikes.
“Let’s have that rate increase, let’s get it over with, here. Because, typically, I don’t think the Fed really could possibly read things as bullish as they might have started the year off thinking,” said billionaire investor from Sprott Inc Eric Sprott,
. “Housing’s weak, auto’s week, retail sales are nothing special, you’ve got inflation affecting lots of area. We have lots of reason for the Fed to be expressing concern. I’m pretty certain that gold and silver will survive yet another rate increase, and prosper,” he added.
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