Market Reacts to Fed’s Interest Rate Decision with Stunning Gold Forecast – Latest News
The US Federal Reserve (Fed) announced its interest rate decision on Wednesday, increasing the policy rate by 25 basis points to the range of 5.00-5.25 percent. The decision was in line with expectations and the price of gold, which rose during the day, increased even further after the announcement. The price of an ounce of gold, which was traded at the level of $2,024 before the decision, reached the level of $2,036 afterwards. Gram gold is trading at the level of 1,266 TL as of 22:00.
Belgin Maviş, the co-founder of BLG Financial Consulting, said that the details of Fed Chairman Jerome Powell’s statement will be crucial. One of the data that the Fed has paid attention to lately is private sector employment in the ADP, which was much higher than expectations. It remains to be seen if the Fed will give a wait-and-see signal by drawing attention to many macro data.
The Fed had previously stated that it could increase the interest rate to 5.10 percent and then to 6 percent. Now, it will be important whether the Fed will address the process, which is described as the debt limit deadlock, especially on the debt limit in the USA, in an environment of recession concerns. Treasury Secretary Yellen has warned that defaulting on debt could spell economic disaster.
Before the Fed decision, gold was slightly above $2,025 an ounce. It is expected that there will be a movement towards $2,030-$2,050 and $2,100 in the upward movements if the course above $2,000 continues. In pullbacks, a drop below $2,000 may reveal the possibility of money heading towards stocks and the money market to take a little more risk from the safe haven.
On the gram gold side, the upcoming election and the possibility of a second round may maintain its upward trend focused on domestic developments. In the short term, 1,300-1,350 TL continues to be the target values.
In the dollar index, it seems that the Fed may pause its rate hikes for a while for the next few months and increase it by another 25 basis points towards the end of the year to the 5.25-5.50 band. The Fed removed from the text the statement that indicated further rate hikes in the future, which is a development the market wants to hear. This brings with it an upward movement on the ounce gold side where the money is parked as a safe haven. It will also bring a short-term respite in the stock market.
