After posting its biggest drop in over a year on Thursday, gold rebounded big time on Friday after the Fed released a report showing weaker-than-expected U.S. economic growth and increasing demand for the yellow metal as a safe haven.
Gold futures plunged down $31.30 or 2.4% as investors misinterpreted the Fed’s comments as hawkish. “The digestion of Wednesday’s statement tells you the Fed will be data driven, and that helps the hawkish cause,” said a senior vice president with RBC Capital Markets Global Futures to the WSJ.
But boy was he, and other analytsts, wrong…
Economic data indicated that the economy slowed in the fourth quarter of 2014, giving gold traction as a safety net. Furthermore, plunging oil prices and the Euro crises has propped up gold prices during the month of January.
MarketWatch reports:
“With Friday’s early rebound, however, gold is up around 6.8% for January, which would be its biggest monthly rise since a 7.3% gain in July 2013, according to FactSet.”
Though gold is set for its biggest weekly drop since November, January is still likely to be the metal’s best month in 1-1/2 years.
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