In the meantime it seems that investors are not expecting any significant change in current figures. Given the fact that many economic indicators have shown improvement so far this year, it seems that the Fed could be dragging its feet. In the meantime, the Fed is not the only central bank putting the brakes on its own policy proposals.
The Bank of Japan has added to the volatility in currency markets by refusing to increase money supply, even after worrying inflation figures came out. This pushed the value of the Yen higher against the US Dollar, contributing to the greenback’s slide. In the meantime it seems that monetary policy divergence has taken a step back. Central banks seem to be satisfied with the current situation.
This has created an investment environment in which non-interest-bearing commodities such as gold, have seen a great recovery. Bullion investors have so far been rewarded for doubting the scope of Fed interest hikes. Investing is a risky business in any case, and with interest rate hikes looming in the US, gold hawks could be in for a surprise. In the meantime, their money seems to be in the right place, but it might be time to think about buying into a weaker dollar now, and hopefully make some profit when the Fed hikes the rates.
