The price of gold continues to rise thanks to the Fed

The price of gold regains height but the underlying outlook remains bearish

The price of gold continued to regain height on Wednesday in the wake of the FOMC’s decision to raise Fed rates by 75 basis points, in line with traders’ expectations. The yellow metal took advantage of the decline in bond rates and the dollar due to the absence of a hawkish surprise from the Fed to climb to a two-week high at around $1740.

Powell didn’t rule out a further 75 basis point (or more) hike at the September meeting yesterday, but he said that given the concentration of rate hikes, it would make sense for the Fed to start to hike soon. slow rate hikes.

The price of gold could continue to regain height in the short term, but the underlying outlook remains bearish. Precious metals should continue to suffer from late but rapid monetary tightening by central banks. Monetary tightening should continue to support real rates and therefore put pressure on gold until the developed economies are on the verge of a recession and/or the Fed decides to end its monetary tightening, which which should not be the case before at least the fourth quarter of this year.

A US recession could come towards the end of the year, but a Fed rate cut seems unlikely until inflation returns to tolerable levels near the central bank’s 2% target. Real rates therefore currently have a good chance of continuing to rise, or at least stabilizing, in the coming months.

Gold Price Daily Chart – Key Levels

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