Gold futures bounced past $1,810 today. While investors keep an eye on the Federal Reserve’s (Fed) monetary policy meeting next week.
At 11:50 p.m. Thai time, the COMEX (Commodity Exchange) gold contract is delivered in February. plus $ 14.0 or 0.78% to $ 1,815.50 / ounce
The Fed will hold its monetary policy meeting on Dec. 13-14, the last meeting of the year.
Markets are keeping an eye on Fed Chairman Jerome Powell’s statement on the direction of Fed interest rates in 2023, as well as the release of the policy interest rate forecast (Dot Plot) at the meeting. This will signal the Fed’s interest rate outlook through 2025.
Investors expect the Fed to raise interest rates by 0.50% to a range of 4.25-4.50% in this round of meetings. after rising 0.75% for four consecutive times While Mr. Powell signaled that the Fed would slow down on a rate hike in December.
Markets also expect the Fed to raise interest rates past 5.00% in the middle of next year following the release of strong non-farm payrolls report. This indicates that the Fed’s tightening of monetary policy in the past has not been able to dampen the heat in the labor market. This has led to expectations that the Fed will continue to raise interest rates next year to slow the economy and stem a spike in inflation.
CME Group’s FedWatch Tool indicates that investors now expect the Fed to raise interest rates to a range of 5.00-5.25% in May 2023. After previously forecasting a level of 4.75-5.00%
However, Standard Chartered Bank released a report expecting The Fed may cut interest rates a total of 2.00% next year if the US faces a recession.
The report states that The Fed has underestimated the risk of inflation in 2022, while Fed Chairman Jerome Powell has admitted that inflation is not the temporary phenomenon the Fed previously stated. This caused the Fed to raise interest rates drastically this year to curb inflation.
A rate hike in 2022 puts the Fed at risk of a possible recession in 2023, as it underestimates the damage to the economy from tightening monetary policy.
“The FOMC statement has changed from the original emphasis on the need to extend the tightening of monetary policy. to the need to allocate liquidity in the economy to avoid a serious collapse,” the report said.