If you fancy adding gold to your portfolio but are not sure when to buy, the table below may be of assistance.
Posted on Twitter today by Jordan Eliseo, Chief Economist at ABC Bullion, it shows movements in the gold price two months before and after the US Fed has delivered a hike in its current tightening cycle.
On every occasion, the gold price has traded higher two months after a rate increase. It’s also fallen before four of the five rate hikes were delivered.
While that suggests there’s a bit of “sell the rumour, buy the fact” going on heading into Fed policy decisions, as others have pointed previously, US economic data has a tendency to surprise to the downside in the early parts of the year, something that has tended to weigh on US bond yields and dollar as a consequence.
For a commodity priced in US dollars, that may also help to explain some of the strength in the gold price post-December rate hikes from the Fed.