Gold gains almost 0.6% today as investors anticipate further Fed policy easing cycle, and rising tensions on the Middle East, as media reported that Israel took out probably special, military ground operation in southern Lebanon, however oil market reaction suggest, that markets still ignore spreading escalation scenario in the region. Yesterday, Jerome Powell expressed that US central bank will probably cut interest rates twice times this year (both 25 bps).
On the other hand, Federal Reserve looks really dovish, with Fed Bostic doesn't rule out even 50 bps cut on the November meeting (if labor market weakens) and Goolsbee signalled clearly that 'there will be a lot of rate cuts'. Overall, easing policies on both side of the Atlantic (US - Eurozone) and Chinese interest rate cuts and stimulus programs, with geopolitical tensions and still hard to predict outcomes of the easing cycles, lifts demand on gold, as 'recession hedge'.
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Open account Try demo Download mobile app Download mobile appFed Powell's highlights from yesterday press conference:
- The US economy is in solid shape; we intend to use our tools to keep it there. Policy will move over time toward a more neutral stance if the economy evolves broadly as expected.
- The labor market is still solid, but it really has cooled. If the economy as expected, SEP shows two more 25 bps cuts.
- The Fed is not in a hurry to cut rates quickly; colleagues and I have greater confidence inflation is on a sustainable path to 2%.
- There's nothing suggesting a downturn is more likely now; the labor market may give a better real time picture of the state of the economy than GDP
- Disinflation is broad based, recent data indicate further progress toward sustained return to 2%.
- Housing services inflation will continue to decline as long as growth rate in rents for new tenants remains low.
- A 50 bps rate cut reflects growing confidence that appropriate policy recalibration can maintain labor market strength and inflation moving toward the goal.
Source: xStation5
The US Dollar Index futures (USDIDX) rebounded from 99.8 level to almost 100.8 now, but gold didn't react to that move, stil rising, at $2650 per ounce; signalling short-term positive investors sentiments.
Source: xStation5
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