From a fundamental point of view, the direction of gold movement is often opposite to that of the U.S. dollar.
And the dollar trend in today's realities is dependent on the dynamics of inflation.
Christopher Waller, one of the Fed's most hawkish officials, said there is a good chance of returning inflation to the 2% target, suggesting policymakers may not need to raise rates again.
While these remarks do not fundamentally change expectations for the Fed's December meeting, Waller's comments in particular suggest that there is increasing support among officials for an extended policy pause amid signs of cooling economic activity, inflation, and the labor market.
Waller said on Tuesday at the American Enterprise Institute in Washington that he is increasingly confident that policy is now well positioned to slow the economy and bring inflation back to 2%.
He also added, referencing his last month’s remarks, when growth and inflation data were picking up rather than slowing down, that he is encouraged by the discoveries that have been made in the past few weeks and their potential outcome. Waller said since then data has moved in the right direction. He also outlined forecasts for the fourth quarter that predict a further cool down.
Policymakers voted unanimously to keep interest rates unchanged in a range between 5.25% and 5.5% for a second consecutive meeting earlier this month. Recent economic reports have confirmed Fed watchers’ assumptions that the central bank has finished raising rates and has increased expectations for the first rate cut.
The softer comments from the Federal Open Market Committee’s more hawkish members set the stage for another pause in December, while signaling that they remain focused on the economy’s development and the outlook for inflation.
The Fed will hold another meeting this year on December 12–13. The last time policymakers released economic and rate path projections, at their September meeting, most officials forecast that one more rate hike would be needed this year. That intention has not yet materialized and looks more unlikely.
Other voters on the committee, including Minneapolis President Neel Kashkari and Dallas Fed President Lorie Logan, have pointed this month to the high level of uncertainty, promising that incoming data would determine their decisions.
Chicago Fed President Austan Goolsbee said on Tuesday that this year’s slowdown in inflation has been the biggest in 71 years. New York Fed President John Williams, in a Bank for International Settlements publication released Tuesday, considered this decline quite encouraging.
Further direction of the Fed's monetary policy will be determined by incoming data.
This week, investors will be focused on the Fed's preferred gauge of core inflation, the Core Personal Consumption Expenditures price index.
The publication of October data is expected on Thursday.
If the index value actually turns out to be higher than the previous figure, it may cause a sharp correction in many symbols, including gold (GOLD).
Currently, GOLD technically looks overbought, and the targets of the correction are at the level of 2020.0.
The overall recommendation is to sell GOLD if the Core Personal Consumption Expenditures price index turns out to be higher than the previous figure.
The profit should be taken at the level of 2020.0. Loss at the level of 2060
This content is for informational purposes only and is not intended to be investing advice.
