Federal Reserve officials met to discuss monetary policy for the final time this year – and in doing so gave the gold bulls a major boost. Wednesday’s meeting had been eagerly awaited by economists and analysts as it was hoped that chairman Jerome Powell would provide some indication as to what we could expect in terms of rate increases or cuts in 2024.
Chairman Powell’s comments didn’t disappoint. As recently as two weeks ago, he had firmly rebuffed expectations of rate cuts, saying, “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so.”
However, upon the conclusion of December’s FOMC meeting on Wednesday, a total change of sentiment was apparent, with a much more accommodative learning clearly on show. Speaking about policy moving forwards he acknowledged the potential for rate cuts saying “Having come so far so quickly, the FOMC is moving forward carefully, as the risks of under- and over-tightening are becoming more balanced. “
“As the demand and supply-related effects of the pandemic continue to unwind, uncertainty about the outlook for the economy is unusually elevated.”
Additional information released by the Feds in the form of ‘dot plot’ charts show that three rate cuts are on the cards for 2024.
In the wake of these comments, the dollar quickly started to lose ground, and Treasury yields dropped, but gold leaped forwards, gaining ground through the afternoon. After starting Wednesday at £1,570, the bulls closed out the day decisively up, with prices around £1,607.
With the dollar struggling to halt a backwards slide, the gold bulls are firmly in control. Buy now.
