The Federal Reserve is ready to cut interest rates later this year, according to minutes from its December monetary policy meeting. Even though the Fed continues to signal this, gold prices continue to remain under significant selling pressure.
Fed Minutes: Fed will not rush to loosen monetary policy!
cryptokoin.comAs you follow from , the US Federal Reserve kept interest rates unchanged last month. Additionally, its updated economic projections showed that the Committee sees potentially three rate cuts in 2024. However, the minutes also revealed that although interest rates will fall, the Fed is in no rush to loosen monetary policy in the near future. In this context, the authorities underlined the following points in the minutes:
Nearly all respondents noted that their baseline projections, reflecting improvements in inflation outlooks, imply that a lower target range for the federal funds rate would be appropriate through the end of 2024. Others have observed that circumstances may require keeping the target range at its current value for longer than they currently envisage. Participants generally emphasized the importance of maintaining a careful and data-driven approach to making monetary policy decisions. They also confirmed that it would be appropriate for policy to remain in a restrictive stance for some time until inflation clearly falls sustainably towards the Committee’s target.
Fed remains vigilant about inflation threat
Gold prices did not react much to the Fed’s monetary policy meeting minutes. Spot gold saw some selling pressure and prices fell below the initial resistance at $2,050. The US central bank remains vigilant about the threat of inflation. However, the minutes showed that some committee members saw the risks starting to ease. The following points came to the fore in the minutes:
Participants see upside risks to inflation decreasing. However, they state that inflation is still well above the Committee’s long-term target. They also emphasize that there remains a risk that progress towards price stability will stall.
The minutes also revealed growing concerns about the economy as the Fed continues its restrictive monetary policies. In this vein, “a few have suggested that the Committee may potentially face a trade-off between its dual objectives in the coming period,” it said.
Short-term outlook for gold prices
In the short term, gold investors are adjusting their positions in response to changing expectations of Fed rate cuts. CME Group’s FedWatch tool reduced the odds of a rate cut in March from 90% to 72%. This reflects a noticeable shift in market sentiment. This change in interest rate cut expectations led investors to re-evaluate gold’s upward trend. So gold prices are potentially causing a downward adjustment. The market will continue to react to developing economic data and Fed signals in the coming days.
Gold prices technical analysis: The market is at a decision point!
Market analyst James Hyerczyk evaluates the technical picture of gold as follows. In the current gold market, there is a cautious upward trend as the price is at $2,047.41. This level is above the 200-day moving average of $1,961.68. Therefore, it indicates a positive trend. However, the market approached a support cluster near $2,009.54 and $2,009.00. That’s why it faces a critical turning point. A successful test of this zone could lead to a technical bounce, strengthening the bullish stance.
Conversely, a break below the $2,009.00 level will likely change the momentum of the market. This could potentially accelerate the downward move. Because of this delicate balance, the market stands at a key decision point. Instant gold price movements are likely to determine the short-term trend.
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