Gold and the broader markets are treading water while investors and traders await the release of the November minutes of the Federal Open Market Committee later today.
Since the Fed announced a further 75 basis point hike to its benchmark interest rates at the start of this month, sentiment has shifted to how quickly the US central bank will be able to slow the pace of future rate increases. Today’s publication of the minutes could serve as a reminder of the more dovish position at the time and prompt a fresh rally for equities and gold alike.
Gold has found itself driven for much of the year by the actions of the Fed and the comments by its officials so investors will be poring over every word of these minutes to determine the likely trajectory of the Fed’s interest rate curve over the coming months. While another rate hike is near certain in December, the key question is whether it will be another 75 basis point hike or a more conservative 50 basis point move.
While the majority of eyes are on the Fed today, gold investors will keep half an eye on the continued fallout from the collapse of crypto giant FTX. The breakdown in trust and credibility that FTX’s bankruptcy caused for the wider crypto community has benefited gold with investors moving their funds to the haven asset that has endured through centuries of stock market bubbles and crashes, as well as human conflict.
In the current scenario, the prospect of further interest rate hikes will keep a ceiling on the price of gold, while the broader market jitters exacerbated by FTX are likely to keep prices supported above $1,700 on the downside.
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