Gold Prices Await Federal Reserve Decision with Mixed Expectations

Investing.com – Last week’s trading closed up 0.4%, reaching $1,960 an ounce. But expectations remain mixed ahead of a crucial week. The American rebounded at the end of Friday’s session, after the strong losses it incurred during the week, to record 103.525, and gold and the dollar have an inverse relationship.

The market is awaiting, with mixed expectations, the Federal Reserve’s decision on June 14, and it is expected that the committee will keep this for the first time that the Fed has stopped raising since January 2022. However, attention will not pay much attention to the interest itself, but rather to the future forecasts for the economy that the bank publishes. and members’ expectations of the course of interest.

Chief market analyst at Onda, Edward Moya, says this pause will be a catalyst for gold prices to go up.

“For gold, we will see more optimism that the Fed is done with the rate hike,” Moya said. “The Fed seems likely to halt the monetary tightening cycle and if the updated forecast remains that inflation will come very close to the target, it could be good news for the gold bulls. Gold volatility should rise as prices can exit $1950. to a trading range of $2,000.”

On the other hand, experts believe that any surprises will have severe repercussions on gold’s rise, and it may fall below $1,940 an ounce.

Especially that the Fed is not finished yet, but will pause to assess the situation, given that central banks around the world as we saw last week in Canada, Australia and Switzerland are still on the verge of raising interest rates.

The chief analyst at Capital Economics says that data from the labor market and inflation are strong evidence that the Fed will continue to raise rates later this summer.

Gold is not just waiting for the Fed

A day before the federal decision. Inflation data is the most influential on market sentiment because it is the only guide that the Fed uses to determine whether or not to continue raising interest rates.

Some analysts believe that the Fed’s decision hinges on this inflation report.

“If core inflation comes in at 0.5% m/m or higher, instead of the 0.4% expected, the market view may shift in favor of a rate hike the next day,” says James Knightley, ING’s chief economist.

gold forecast

Suki Cooper, precious metals analyst at Standard Chartered, said that for the summer months, gold may be poised for a slow downward move as investor appetite lacks conviction during a seasonally weak consumption period.

“The gold market is stuck in a comfortable range, and while there are risks that could push prices higher, the risks through the end of the year are increasingly bearish,” Cooper said on Friday. “We believe the floor is well supported; in turn, prices are more likely to drift lower than crash.”

Standard Chartered expects the gold price to average $1,975 an ounce in the second quarter and $1,925 in the third quarter.