Gold climbed toward $1,650 despite the hawkish Fed tone. However, the recovery is set to stall, strategists at Commerzbank report.
Gold under pressure following the hawkish remarks made by the Fed chair
“Fed Chair Jay Powell stressed that the speed of rate hikes was not so important anymore and that the key question was the level at which interest rates would finally peak. And this, Fed members now believe, looks set to be higher than they had assumed in September.”
“The Fed’s goal is to bring real interest rates into positive territory. This means that the key rate will remain at a high level until such time as the rate of inflation has fallen below it.”
“Generally speaking, the FOMC meeting turned out to be more hawkish than expected, which was then reflected in higher interest rate expectations and a firmer dollar and ultimately caused the Gold price to fall. Shortly before hitting its yearly low, Gold did a U-turn and began climbing again, though today’s US labour market report could put the brakes on its recovery again.”
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