Gold Rises Ahead of Key Fed Rates Decision

Gold Rises Ahead of Key Fed Rates Decision”

The sudden turn of events was on the market's cautiousness on the next central bank meeting that is expected to hit this week.

The US Fed's Federal Open Market Committee (FOMC) said Wednesday that the key interest rate for overnight loans to banks would stay in a target range of 1 percent to 1.25 percent after core inflation - excluding volatile food and energy prices - "remained soft". The committee, in our view, is likely to look favorably at the underlying components of the Q3 GDP report which showed a positive contribution to growth from both net exports and inventories; we see trends in these categories as reflecting the synchronized global growth backdrop.

Credit Agricole Research: We expect the FOMC meeting to be relatively uneventful. While the doves have been arguing for patience the majority appears keen to raise rates one more time this year at the December meeting. No additional information about the reduction of the balance sheet is expected (i.e., a Fed estimate of the long-term size of the balance sheet).

They have argued that the US economy is strong enough to handle higher interest rates.

Rate-setters in the USA decided unanimously to keep monetary policy at its current "accommodative" settings, while indicating that they continued to monitor price developments "closely".

Gold is sensitive to moves higher in the US dollar - a stronger dollar makes gold more expensive for holders of foreign currency, thus, reduces investor demand for the precious metal. The figures were lower than most analysts expected which are 52. The job market "has continued to strengthen", and economic activity "has been rising at a solid rate despite hurricane-related disruptions", the Fed said in a statement. United States gold futures for December delivery were almost unchanged at $1,270.90.

Yellen and her colleagues raised interest rates last December, and again in March and June. We expect them to note general satisfaction with economic conditions, despite concerns that inflation is still running below target. While the bank is expected to leave rates unchanged, investors will be watching for any indications that it will press ahead with another increase next month.

"We are waiting for some big announcements, some important news".

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