Dec 17, 2024 (MENAFN via COMTEX) --
(MENAFN - Investor Ideas) Investorideas ( ), a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, Expert Research Strategist at Pepperstone.
"The price of gold shows relative stability at the start of the week, following two consecutive declines, in a context marked by the upcoming Federal Reserve (Fed) decision and the release of key economic data. This pause reflects investor caution as they await signals from the U.S. central bank.
The market has almost fully priced in a 25-basis-point rate cut during this week's meeting. This situation has served as a relative support factor for gold, as a more accommodative monetary policy tends to weaken the dollar, making gold cheaper for holders of other currencies and reducing the comparative cost of acquiring non-yielding safe-haven assets like the yellow metal.
However, the main focus is not solely on the size of the cut but on the updated economic projections that the Fed will release. These projections, which include outlooks on economic growth, inflation, and unemployment, could provide crucial insights into the future path of monetary policy, significantly influencing market sentiment and the price of gold.
The key lies not in the rate cut itself but in the Fed's outlook for the coming months. If the Fed adopts a more hawkish tone, suggesting a pause in cuts or even the possibility of future hikes, gold could face downward pressure. Conversely, a more "dovish" message, emphasizing the need to maintain accommodative policies, could support the precious metal.
In addition to the Fed decision, this week features a busy economic calendar with important references. The Personal Consumption Expenditures (PCE) index and the consumer sentiment reading will provide valuable insights into the health of the U.S. economy and could create volatility in the markets, including gold.
Several factors continue to support gold prices. Persistent geopolitical tensions maintain a positive environment for safe-haven demand. Additionally, concerns over potential new tariffs from the Trump administration and global trade tensions enhance its appeal as a hedge against economic uncertainty. Added to this is the continued demand for gold by central banks globally, which is expected to remain at elevated levels, acting as a key fundamental support.
In the long term, the outlook for gold remains relatively favorable as global monetary policy continues to be accommodative. However, one factor that could counter this trend is the possibility that policies implemented by the Trump administration generate inflationary pressures. A significant increase in inflation could force the Fed to adopt a less accommodative stance than anticipated, limiting its ability to implement additional rate cuts and negatively impacting gold prices.
In summary, gold prices are at an inflection point, awaiting signals from the Fed. The interplay between monetary policy, economic data, and geopolitical factors will continue to shape its trajectory in the coming months."
Disclaimer/Disclosure: disclaimer and disclosure info
Global investors must adhere to regulations of each country.
MENAFN16122024000142011025ID1108999024
COMTEX_460946238/2604/2024-12-17T04:06:23
