Gold prices eye all-time high after Fed signals rate cuts are coming – What's next? [Video]
|It's official: Google searches for the phrase "How To Trade Gold" are now back at the highest level seen in over a year!
This comes as no surprise, considering the current macroeconomic backdrop is fuelling a "perfect storm" for Gold, positioning the precious metal as one of the best performing Commodities of 2023.
On Wednesday, Gold surged to a fresh six-month high of $2,052 an ounce – extending its winning streak for a fifth consecutive day – as traders continued to grow increasingly confident that the U.S Federal Reserve will start cutting interest rates by early 2024.
Gold's bullish momentum gathered pace after Federal Reserve Governor Christopher Waller, one of the central banks most influential voices – signalled that interest rates were unlikely to rise further and could be cut if inflation continued to slow.
"I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to the Fed's target of 2%", Waller told the American Enterprise Institute Think-Tank.
"If the decline in inflation continues, we could start lowering the policy rate just because inflation is lower," he said.
Overall, traders interpreted his comments as a shift in tone that appeared to start a countdown on a long-expected pivot.
Last month Inflation fell more than expected to 3.2%, compared with a peak of 9.1% in June last year. Waller's comments now position the Fed's preferred measure of inflation – PCE Inflation data on Thursday and Friday's jobs report – as the next big money-making opportunities, which traders will not want to miss out on!
Elsewhere, this week marks the final chance for Fed policymakers to set out their views publicly before their usual pre-meeting communications blackout goes into effect.
As always, Federal Reserve Chair Jerome Powell will have the last word with his hotly awaited speech expected on Friday at Spelman College in Atlanta.
The Federal Open Market Committee held its benchmark interest rate steady at a 22-year high in the range of 5.25% to 5.50% at the end of its November policy meeting. Traders have already begun pricing in a strong possibility that officials will keep rates on hold again at their December meeting.
Whichever way you look at it, one thing is clear. The stars appear to be aligning for Gold, which ultimately suggests it won't take much for prices to breach new record highs in the coming weeks and months ahead.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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