Gold rallied on Wednesday ahead of the outcome of the Federal Reserve’s policy meeting, where the US could give clues about the timeline to cut stimulus. As of writing, spot gold is up 0.09 percent. Meanwhile, analysts shared their expectations for the precious metal. cryptocoin.com We have compiled the comments of 4 analysts…
“Gold may ease in the near term”
DailyFX Currency Strategist Ilya Spivak stated that in the absence of an official bearish signal, gold may ease somewhat in the near term, adding that this month’s downtrend will continue. The Fed’s two-day meeting will conclude on Wednesday. However, AirGuide director of corporate advisory Michael Langford expects the Fed to be more cautious about reducing stimulus, citing an OECD report that argues it’s too soon for governments and central banks to withdraw economic support.
A future confirmation that the Fed has not reduced monetary support resulting in a weakening dollar could help gold rise to $1,800, Langford said. Wednesday’s announcement will also present, for the first time, the Fed’s interest rate forecasts for 2024. “By the end of 2024, the Fed forecasts more than 100 basis points in cumulative rate hikes, this would indicate a tough monetary policy stance and would be a negative catalyst for gold,” Spivak said.
Traders are also watching developments around the issue as China’s debt-laden real estate developer Evergrande said Thursday it will pay some bond yields and provide some relief for equities.
Analysts focus on Fed meeting
On the other hand, CMC Markets UK chief market analyst Michael Hewson said: “The biggest question that needs to be answered is whether the current market uncertainty will alter any possible timelines the Fed may have when announcing it will reduce asset purchases.” Hewson added that this would put downward pressure on gold more than anything else.
According to some analysts, the Fed may lower gold further by announcing that it will begin to decrease in asset purchases in the fourth quarter as a result of its meeting. Reduced central bank incentives and interest rate increases tend to increase bond yields, raising the opportunity cost of holding interest-free gold. Also, ThinkMarkets analyst Fawad Razaqzada said it was not unreasonable to expect some safe-haven influx “at risk of contagion from the debt crisis” as uncertainty in equity markets remained high despite the recovery.
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