The statement issued by the chairman of the Fed, Jerome Powell yesterday has given a clear direction that interest rate increases will still continue in America. Compared to the Fed's statement that was released at last week's FOMC meeting, the market at that time saw that the Fed was expected to not raise interest rates in the future. As a result of the market survey, only 15% percent of participants expected the Fed to continue raising interest rates and interest rate cuts would be implemented at least in the middle of next year.
We at Saracen Markets have issued an expected statement after the FOMC meeting (please refer to the article dated November 2, 2023) that "the Fed still has the potential to raise interest rates". The Fed's statement yesterday clearly stated that inflation is still at risk of rising and the Fed is ready to raise interest rates if inflation still shows signs of rising.
Impact on the Gold Market
Concerns about rising inflation will encourage investors to invest in the precious metal commodity market as a measure to save investment funds called "hedging". The strategy applied by these investors will usually be implemented when expectations about rising inflation and interest rates arise.
"Gold Futures" Market
The trading value of "Open Interest" in the "Gold Futures" market at the trading session of Hong Kong and Mumbai today is seen to have increased by more than 1,000 contracts and the number of trading transactions that took place also increased to more than 12,000 trading values. Therefore, the gold market is seen to have "recovery price momentum" until at least the price level of $2000. If on the contrary the price can continue the decline until below $1950.
