Gold Talking Points
Gold pulls back from a fresh weekly-high ($1229) despite the renewed rout in risk sentiment[1], but recent price action keeps the monthly-high ($1237) on the radar as prices for the precious metal extend the recent string of higher-lows.
Gold Price Forecast: Monthly-High on Radar Amid String of Higher-Lows
Keep in mind that gold prices[2] appear to be bound by a broad range as the recent advance appears to be sputtering ahead of the October-high ($1243), and the precious metal may continue to consolidate ahead of the next Federal Reserve interest rate decision on December 19 as the central bank is widely anticipated to raise the benchmark interest rate by 25bp to a fresh threshold of 2.25% to 2.50%.
It seems as though the Federal Open Market Committee (FOMC) will further normalize monetary policy in 2019 despite the gridlock in Congress[3], and the central bank may continue to endorse a hawkish forward-guidance as the economy sits at full-employment, while inflation climbs above the 2% target.
At the same time, the shift in U.S. trade policy[4] may ultimately encourage Chairman Jerome Powell & Co. to temporary push the fed fund rate above neutral as ‘several participants reported that firms in their Districts that were facing higher input prices because of tariffs perceived that they had an increased ability to raise the prices of their products.’ Rising interest rates may continue to sap the appeal of gold as the FOMC[5] shows no interest of abandoning the hiking-cycle, but sentiment surrounding the precious metal remains skewed even though market participation appears to be waning ahead of the U.S. holiday.
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