27 October 2022 | Other

Gold strengthened, but pressure on the metal remains

According to Investing.com, gold traded near its highest level in two weeks as the dollar declined amid growing expectations that the Federal Reserve will ease its hawkish policy this year.

The dollar is now nearly 5% below its 20-year high from September. 

While almost everyone in the markets expects the Federal Reserve to raise rates by 75 basis points in November, the odds are growing that there will be a 50 basis point increase in December. 

Traders are now predicting the possibility of a 50-bp rate hike at the Fed's final meeting of the year with a nearly 60% probability. 

The prospect of a less hawkish Fed sentiment has greatly calmed gold prices, as rising interest rates this year have significantly reduced the yellow metal's appeal.

But even if the Fed softens its hawkish stance, U.S. interest rates are projected to remain high until at least 2024, contributing to lower gold prices.

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