Gold Price News and Forecast: XAU/USD - Why is gold not rallying whilst the dollar is selling off?

FXStreet Team FXStreet

Sweden Ends Its Experiment with Negative Interest Rates, Should Gold Be Worried?

In December, the SverigesRiksbank, the world’s oldest central bank, has raised the main interest rate from -0.25 percent back to zero, ending its experiment with the negative interest rate policy, as the chart below shows.

This is a huge change. As a reminder, Riksbank was a pioneer of negative interest rates. As early as in 2009, it moved the overnight deposit rate below zero. Then, in 2015, the Swedish central bank cut its main interest rate, the repo rate, to -0.10, worried about the repercussions of the sovereign debt crisis in the euro zone. In 2016, Riksbank was forced to go further, setting the interest rates as low as -0.50 percent, to prevent a Japanese-style deflationary spiral in Sweden.

Why is gold not rallying whilst the dollar is selling off? [Video]

There are a few quandaries facing gold right now. Why is gold not rallying during this massive risk sell-off? Why is gold not rallying whilst the dollar is selling off? The momentum of the gold bull run played out last week, moving well into overbought territory on RSI. Since then the market has been unwinding. The reaction during yesterday’s session, where gold turned back from $1660, just shows that the bulls have run out of steam and profit-taking has hit again.

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