The gold price failed to catch a break after the Fed tremor, and according to analystsdollars, the path of monetary policy is not expected to change. The gold market appears to be far from breathing a sigh of relief after a major rebound by the Federal Reserve announced late Monday. For details Cryptocoin. com


What does monetary policy mean for gold?

Dallas Fed President Robert Kaplan said he will retire on October 8, and Boston Fed President Eric Rosengren said he will retire on September 30. Two embattled regional central bank governors are resigning as they come under scrutiny for investments they made last year. Analisdollarser says six seats will be open at the 19-seat monetary policy meeting next month. In a comment, Ole Hansen, head of commodities strategy at Saxo Bank, said vacancies could create some uncertainty as almost a third of the seats on the committee need to be filled.

Analisdollarser says that Rosengren’s loophole could have the most significant impact on future monetary policy because, in the current system, he will become a voting member of the Federal Reserve by 2022. “It was a hawkish voice at the Fed,” Hansen said. The Dallas Fed representative will become a voting member in 2023. The resignations also come amid growing expectations that the Federal Reserve is trying to change its monetary policy and will announce plans to cut monthly bond purchases at its monetary policy meeting in November. In addition, the contraction is expected to start in December and end in mid-2022.

The latest assessments also show the Federal Reserve split evenly on interest rate hikes. Currently, nine members see potential to raise interest rates in December 2022. Even one vote can make a difference when the central bank raises interest rates. Some analystsdollarser said the Fed shakeout did not affect gold because it is unlikely that Rosengren will be replaced by a dovish president.

How far is the drop?

Following the Fed news, gold prices fell further below the critical support level of $1,750 per yellow ounce. December gold futures were last down more than 1% on the day at $1,731.70 an ounce. Senior technical analyst Jim Wyckoff says:

While somewhat surprising, the resignations of Kaplan and Rosengren did not and likely will not affect markets or Fed policy. New Fed chairmen are chosen by regional bank executives, not by President Joe Biden, so Biden cannot appoint someone with an ideology on monetary policy.

Commerzbank precious metals analyst Carsten Fritsch said she does not expect retirements to affect gold prices. “Obviously it is assumed that their successors to be appointed by the relevant regional Fed branches will have similarly hawkish views,” he said. sdollarser states that investors are paying close attention to US monetary policy as the potential of tighter monetary policies supports the US dollar and increases bond yields, both of which are negative factors for the gold market. According to an article from the Wall Street Journal, Kaplan traded several million dollars in individual stocks last year. Meanwhile, Rosengren has invested in real estate investment trusts and has been criticized for making moves while highlighting risks in the real estate industry.

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Michael Lewis


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