🔼 Gold gains taking advantage of dollar weakness
During the Fed's last decision, which took place on November 1, the FOMC committee decided to keep interest rates unchanged at 5.5%. In contrast, the last decision ending with a rate hike took place in July. Today, investors will be presented with a report that may indicate a change in the bankers' previous relatively hawkish rhetoric.
What to expect from the FOMC Minutes :
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Create account Try a demo Download mobile app Download mobile app- The minutes following the early November decision will likely show that FOMC members were more inclined to keep interest rates stable in the near term.
- Many bankers may also signal that the recent sharp jump in yields will be a kind of substitute for further hikes, reducing the need for further tightening on the part of the Federal Reserve.
- Another reason for the potential change in outlook may be that several FOMC bankers see signs of cooling in the labor market.
- On the other hand, during his November 1 speech, Jerome Powell stated that the committee is "not convinced" that interest rates are tight enough.
However, the money market rules out the possibility for further interest rate hikes. In this aspect, it is worth mentioning that back in early November (the day after the Fed's last decision and 12 days before the CPI inflation reading for October) the chance of another hike was quite high. The first interest rate cut is currently priced for either March or May 2024. Source: Bloomberg Financial LP
GOLD above $2,000
Gold quotes took advantage of the recent weakness of the US dollar and climbed above the $2,000 barrier. However, it should be noted that the area around this round level was a key resistance, from where a strong downward correction began in late October, reaching almost $100. If history were to repeat itself, the potential range for a pullback would be around the $1945 level, where previous price reactions and the EMA100 average are located. On the other hand, in the event of a sustained breach of the $2,000 level, increases could reach resistance at $2021. This place is due to the location of the 78.6% Fibonacci retracement of the entire downward wave counting from the peaks of May this year.
Source: xStation5
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