Investors in gold prices and other markets are waiting for data from the US Federal Reserve (FED) on the course of monetary policy. They are also focused on the speech of Fed Chairman Jerome Powell. With that focus, gold prices rose on Wednesday, aided by the drop in the dollar. So, what to expect from Powell’s speech? When will the talk be? Here are the details…
Market focus in Fed Chairman Powell’s speech
Spot gold is trading at $1,755.48 an ounce. The dollar index fell 0.2 percent, making gold cheaper for other currency holders. Today, there will be a development that will affect gold prices. Although the December Fed meeting will be held on 13-14 December, the FED Chairman will attend a meeting today. Jerome Powell will speak at the Brookings Institution’s event in Washington. It should be noted that the talk in question will coincide with 21.30 Turkish time. The speech will be evaluated for new clues regarding the Fed’s rate hike plans for next year.
On the other hand, the ADP National Employment report, which is expected to be published at 16.15 CET, is on the radar of investors. Edward Meir, ED&F Man Capital Markets analyst, said Powell’s speech was the main focus of the market. The analyst used the following statements:
If Powell takes a hawkish stance, the dollar will strengthen and gold will likely fall to $1,745. However, if it sounds more accommodating, gold may perhaps rise to $1,780.
How Fed Chairman speech affects Bitcoin and altcoins
In line with Edward Meir’s statements on how gold will be affected after Powell’s speech, expectations in the crypto money field can also be determined. The gold and cryptocurrency market has been showing an inverse correlation lately. In other words, when the safe-haven gold rises, the confidence in the market decreases. In cases where confidence in the market declines, investors turn away from risky assets such as BTC. This causes a drop in prices.
Chinese influence on the gold market
Higher interest rates translate into higher opportunity costs to hold the non-yielding asset. So this year it has kept the traditional status of gold in check as a hedge against rising inflation and other uncertainties. Meanwhile, the National Health Commission reported a slight drop in new COVID cases for China, the largest gold consumer, on Nov.
Edward Moya, senior analyst at OANDA, said that when China is strong, gold increases risk appetite and increases demand for jewellery. That’s why he said gold could gain momentum if China’s health authorities give some clear signals that they are close to fine-tuning the zero-COVID policy. According to an official survey, China’s factory activities contracted faster in November. It has also been under the weight of softening global demand and COVID-19 restrictions.
Investors see the ‘light at the end of the tunnel’
David Meger, head of metals trading at High Ridge Future, said that with the bulk of the Fed’s rate hikes priced in, investors now see the “light at the end of the tunnel” in terms of ending interest rate hikes. cryptocoin.com As we have also reported, it increased interest rates by 75 basis points for the fourth consecutive month earlier this month to rein in rising inflation.
Fed funds futures priced in a 63.5 percent probability of a 50 basis point increase at a policy meeting this month and an 88 percent probability of a similar rate hike in February. “The potential recovery in the dollar and still rising interest rates around the world mean that investors can withdraw from low and zero-yield assets like gold,” said Fawad Razaqzada, market analyst at City Index.
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