The price of gold rose on Wednesday with a softer dollar. However, cautious investors are waiting for an important Federal Reserve policy that will provide clues to interest rate increase rate. Analysts interpret the market and share their predictions.
“A 50 BPS clue from the Fed is enough for the increase in gold price”
Spot gold was traded for $ 1,650,67 with an increase of 0.2 %during the article. US gold futures increased by 0.3 %to $ 1,655.00. Meanwhile, the dollar index (DXY) fell 0.2 %. This made the dollar priced gold cheaper for other currencies owners. City Index Analyst Matt Simpson makes the following comment:
If we get any story about the weakness of the US dollar over this 50 BPS clue from the Fed, it is not difficult for gold to return to $ 1,670 and $ 1,680 even in the next sessions. In the larger picture, the Fed continues to increase interest rates. Probably up to 5 %. However, we are still close to the end of this walking cycle.
“Escape from this range can propose a direction”
Kriptokoin.comAs you have followed from the Fed decision today will announce. Then President Jerome Powell is planned to have a press conference. The data released on Tuesday revealed that business deficits in the US increased unexpectedly in September. This underlined a flexible labor market. He also showed that rapid interest rate hikes have not yet affected the real economy. According to Reuters Technical Analyst Wang Tao, spot gold seems to be neutral in the range of $ 1,641-1.658. Analyst says that it is possible for you to escape from this range and propose an direction.
“FED’s announcement will be a ‘breaking moment’ for gold”
Dear metal, dollar and US Treasury returns, the FED has fell for seven consecutive months due to aggressive tightening. This pointed out the longest defeat series for more than five years. Oanda Senior Analyst Edward Moya says that the Fed’s announcement for Gold will be a ‘breaking moment’. Analyst makes the following statement:
Gold holds a significant portion of today’s earnings when entering FOMC. The labor market will cool. However, it will not be as fast as people think, it is possible for the Fed to keep the slowdown rates in place. Although not in December, it will probably be at the February meeting.
“The price of gold will ultimately fall below $ 1,600”
The price of gold fell by about 21 %since the Fed exceeded the $ 2,000 level in March due to rapid interest rate hikes. Bart Melek, President of the TD Securities Commodity Markets Strategy Strategy, shares his predictions:
We continue to believe that gold will ultimately fall below $ 1,600. However, I think there is probably a resistance of around $ 1,675-1.680.
“The market is already pricing the Fed Pivot”
A few economists warn that the FED cannot withdraw from the accelerator yet. An increase of 75 BPS provides a large extent consensus. However, there are also increasing speculation about some pigeon pivots. For the US dollar, which creates weight on gold, this means more earnings in the short term. Ing’s Global Markets President Chris Turner is suspected that the FED will fuel such speculation. Analyst makes the following assessment:
This is possible to prepare the ground for the extension of the recovery of the dollar in the second part of this week. In fact, the market is already pricing the pivot. In December, we suspect that the probability of making another 75 BPS increase is priced. The 4.5 %correction of the dollar for a month may have ended last Thursday. This week’s events are likely to be a catalyst to send the dollar to high levels. Our main situation predicts that the dollar re -tested the highest levels this year.
“We do not expect the Fed to give a pivot clue to the markets”
Wednesday’s interest rate decision will not include updated macro estimates or point graph. So everyone focuses on Powell’s press conference. However, BBH Global Currency Strategy President Win Thin says the most likely result is still hawk and a power -dependent Powell. Analyst makes the following comment:
The markets will closely monitor the press conference. However, we expect President Powell to maintain the hawk tone that has been constantly held since Jackson Hole at the end of August. We don’t think it will give a pivot clue to the markets.
“We expect a pause in the tightening of the Fed after December”
Some are looking for a pause in tightening next year as soon as possible. But even they do not foresee that the Fed will declare it right after this week’s meeting. In addition, with problematic inflation and a powerful labor market, the FED will be worried about starting to relax early financial conditions. Abn Amro’s senior US economist Bill Diviney says:
Our main situation is that the Fed increases the upper limit of interest rate to 4.5 %with an increase of 50 BPS at the December meeting of the FED. After that, we expect a pause in tightening. However, we doubt that the FED will hurry to point out at the next meeting. If the FED chooses to signal a smaller interest rate hike in December, it will probably accompany a language that suggests that rates may need to be higher than before. We think that the Fed will continue to tend to avoid detailed forward -looking guidance between the central banks.
“With the Fed’s policy change, the gold price will rise”
Market expert Hatice Kolçak says the potential movement of gold is connected to the FED. “The world is collecting gold, Kol Kolçak says, many countries draw attention to the gathering of physical gold of the central bank. However, ounce of gold is continuously selling. That’s why the yellow metal remains cheap. The fact that gold cannot make a premium this year attributes Fed to interest rates. The expert finishes his assessment as follows:
However, the Federal Reserve will no longer turn the cycle with a constant interest rate hike. When this happens, the price of gold will rise. Therefore, it will support the Fed’s policy change. In this process, we can see the levels of $ 1,800-2,000. The dollar rate will also climb up. Therefore, gram gold will rise with ounces and dollars.