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The gold market is struggling to find direction below $1,800 as the Federal Reserve has stopped announcing its monthly bond-buying plans for at least another meeting. The Central Bank said in its monetary policy statement:

Last December, the Committee stated that it will continue to increase Treasury securities by at least $80 billion per month and agency mortgage-backed securities by at least $40 billion per month until substantial progress is made towards maximum employment. Since then, it has made progress towards these goals. If progress continues as generally expected, the Committee decides that a moderation in the pace of asset purchases may soon be warranted.

Some analystsdollarser states that interest rate forecasts could keep gold prices below $1,800

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As we reported , the overdue tapering plans came as the Federal Reserve left interest rates unchanged in the zero-limit range as expected. However, the US central bank is still trying to tighten its monetary policies. According to the latest projections, 2022 sees its first potential rate hike.

Forexlive. com’s chief currency strategist Adam Button described the new dot chart predictions as hawkish. Despite its hawkish appearance, gold prices are seeing repurchasing interest following the Federal Reserve’s monetary policy meeting. December gold futures were last trading at $1,779.30. The Federal Reserve’s outlook on current activity has been unchanged since summer as determination continues to strengthen.

Although the Federal Reserve is delaying tapering plans for this meeting, some analysts say committee rate estimates could keep the gold price under $1,800. Looking at projections, also called dot charts, it is seen that the Committee has increased interest rates to 0.3% in 2022 from its previous forecast of 0.1%.

According to market analyst Neils Christensen, this signals that the central bank will make at least one rate hike next year. The median forecast of interest rates for 2023 rose to 1% from the 0.6% forecast in June. For 2024, the central bank projects interest rates at 1.8%. Despite the comments in the monetary policy statement, the central bank committee lowered its growth expectations for the remainder of 2021.

What updates have been made to k data?

According to the updated k projections, the Federal Reserve forecasts US gross domestic product to grow by 5.9%, revised from 7% this year. In June. Next year’s growth was revised to 3.8% from the previous 3.3% forecast. is expected to grow by 2.5% in 2023, one click above the 2.4% forecast in June. At first glance for 2024, the central bank forecasts GDP to grow by 2%.

The US central bank is also reducing its optimism about the labor market. The unemployment rate for 2021 is expected to be 4.8%, compared to the forecast of 4.5% in December. The unemployment rate for next year is estimated to be 3.8%, different from the previous forecast. In 2023, the unemployment rate is expected to decrease to 3.5%, unlike the forecast in June. For 2024, the unemployment rate is expected to hold steady at 3.5%.

US central bank also expects higher inflation pressure. Forecasts show that the Index of Personal Consumption Expenditures (PCE) is expected to rise 4.2% in 2021 from the 3.4% forecast in June. Inflation pressures continue to grow in 2022 and the PCE is projected to increase by 2.2%, revised from its June forecast of 2.1%. In 2023, the Federal Reserve expects inflation to stay at 2.2%. By 2024, consumer price yellow pressure is expected to decrease by 2.1%.

Core inflation expectations, which exclude fluctuating food and energy prices, are expected to increase by 3.7% this year compared to the previous 3.0% forecast. Core inflation is projected to increase by 2.3% next year, compared to the June forecast of 2.1%. In 2023, inflation is expected to rise to 2.2% from the previous estimate of 2.1%. Inflation is expected to fall to 2.1% in 2024.

Tapering timing tips

Avery Shenfeld, senior st at CIBC, also describes the latest monetary policy statement as a little hawkish. He adds that he expects the central bank to announce its tapering plans at its monetary policy meeting in November. The expectations shared by the senior st are as follows:

While it was clear that committee members thought they would start tapering before the end of the year, they were unwilling to do so if problems with the virus deepened. We will adhere to the view that the tapering announcement will be made at the next meeting and will begin before the end of the year.


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Michael Lewis

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