Wednesday, 28th June 2006 (3840 views)

The price of gold rose on Asian stock markets today (Wednesday, 28 June) amid speculation that the US federal government would halt its series of interest rate rises.

If interest rates are low or steady then gold becomes a desirable investment commodity, although the opposite is true when global interest rates are rising.

Traders on Eastern markets today are betting on the fact that the US Federal Reserve meeting, which is currently convening, would not raise rates more than once or twice more in the coming months.

The latest two-day meeting of the Federal Reserve began today and the decision of the committee is widely expected to be a 17th straight rise.

Speculators are now suggesting that this or August's meeting could be the last rates hike, as concern grows that it will curb domestic economic growth.

"Gold has been closely following the Fed watch and if people think the chance of further rates hikes will lessen, then gold could go higher,' Alastair McIntyre, ScotiaMocatta's head of marketing in Hong Kong, told Bloomberg.

"The market is now basically watching for the meeting," he added.

 

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