The gold market is showing signs of life after a quiet start to the week. Spot Gold has been on an upward trajectory all morning and appears set for another successful day, closing at nearly record highs today! The yellow metal’s recent rise can be attributed largely due to a sharp drop in USD index values this morning – something that often happens when traders become unsure about economic stability worldwide or whether there will be a war somewhere nearby (the last thing anyone wants).
The Week Was Uneventful.
It seems people may finally see some positive movement coming out of Leaner’s gold reports soon, with analysts saying that the precious metal is poised for a breakout above $1,350 per ounce. This comes after weeks of sideways trading and relatively low volatility.
For everyone who is looking to get in on the action, now might be a good time to start monitoring gold prices closely. Many experts believe that people could see gold hitting new all-time highs shortly, so now could be a great time to start investing.
This week was another uneventful one for the gold market. The bears managed to get some work done and nearly took prices down below $1,700; however as has been their pattern so far this year (and last), buying pressure emerged near that level which is why people now set off slightly from where things were just three days ago – all thanks in part due an economic recovery within China coupled with worries about global growth–both strong currencies have helped offset recent disappointments elsewhere on Wall Street. The bears are still in control of this market, but they have been losing some steam lately.
Fed Needs To Be Careful As It Looks To Continue Hiking Rates Aggressively.
The Fed may need to be increasingly careful as it looks ahead and considers how aggressively it can hike rates. Some market participants felt like recently, before the last couple of weeks where Chief Powell made it abundantly clear that he intends on getting inflation down before giving up at all costs–maybe even taking interest rate levels to 20%. That’s a possibility, but one that is not likely as it would be very difficult to do so. The market is now expecting at least two more hikes this year, and if the data prints continue to come in strong then three could happen.
The big question for the gold market is how will it react when the Fed finally does start to taper its quantitative easing program. The answer to that question is still very much up in the air, but it’s something that traders will be keeping a close eye on in the coming months.
In the meantime, gold prices are likely to continue to be volatile as traders react to news about the economy and the Fed’s plans for interest rates. So, for everyone thinking about investing in gold, make sure to stay up-to-date on all the latest news and information. This way everyone will be better prepared to make informed investment decisions.
The Fed is preparing for the worst, but it may not have enough tools in its toolkit to combat inflation. Markets are pricing in about a 50-50 chance that rates will go up this month and next year’s meeting could bring even more hikes before 2022 comes knocking at people’s doorsteps.
It appears as if The Federal Reserve System has been unwillingly implementing policies that would help them achieve their goals of controlling economic growth through credit tightening due to rising bond yields across multiple countries around the globe that fear another Great Depression similar to the 1930s. The virus has been a big factor in these decisions as it still ravages Europe and cases are starting to surge in the United States again.
The central bank has decided that it will start buying bonds at a pace of $120 billion per month to keep rates low and help spur economic activity. This is good news for the gold market as it will help keep rates low and continue to support the price of gold.
The Fed is also considering changing its inflation target from 2% to 2.5%. This would be a dovish move and would be seen as positive for the gold market.
All in all, the Fed is walking a tightrope and they need to be careful not to move too aggressively on rates or taper their asset purchases too soon. If they do, it could have negative implications for the economy and the gold market. So, traders will be closely watching to see what the Fed does next.
The Bottom Line
The bottom line is that the Fed is in a difficult position and they need to be careful not to make any missteps. The market is expecting at least two more rate hikes this year, but if the data continues to come in strong then three could happen. The big question for the gold market is how will it react when the Fed finally does start to taper its quantitative easing program. The answer to that question is still very much up in the air, but it’s something that traders will be keeping a close eye on in the coming months. In the meantime, gold prices are likely to continue to be volatile as traders react to news about the economy and the Fed’s plans for interest rates.
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COMTEX_414295718/2764/2022-09-13T03:32:42