Why is gold price down as markets price in a pause after 10 consecutive rate hikes? Fed gold economy
The gold market extended its weekly losses ahead of the Federal Reserve's interest rate decision as markets re-priced expectations for a rate skip on Wednesday, followed by a rate hike in July.
"Directional progress should not be confused with mission accomplished," House and Pugliese added."There is a lot of ground to cover between the 5.0% run rate of core inflation today and the FOMC's 2% goal." The focus for the gold market will be the updated economic forecasts, the dot plot, and Fed Chair Jerome Powell's press conference.
Analysts warn that if there is a surprise rate hike on Wednesday, gold is at risk of an extensive selloff. "The most likely path for the economy is further softening of activity and the job market, passing through to lower inflation and eventually lower interest rates," said Adams."But economic growth and the job market have been more resilient than expected; if that trend holds up, inflation could surprise to the upside too, forcing the Fed to keep rates high for longer than expected.
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