Strict stance of the Federal Reserve and pressure on gold:
On Tuesday, gold prices found a light decline. Investors are assessing stringent statements on interest rates on behalf of the US Federal Reserve authorities at this time. At the same time, the entire market is now on the upcoming inflation data of the U.S., which will give a clean idea of the further movement of the central bank
Spot gold (Spot Gold) on the morning 05: 55 ET (10: 55 GMT) during business 1.6% fell to 4,073.09 dollars per ounce, while American gold futures was trading at $4,081.45 per ounce with a decline of 0.8%. On the other hand, the dollar index reflecting the strengthening of the US dollar against the world’s major currencies reached a level of 0.1% to 101.71
Softening and sleeping recent moves in crude oil:
Earlier on Monday, 1.7% was recorded in gold and last week it had a rise of about 5%, which had reached the prices close to $4,130. On the other hand, the prices of crude oil slipped down to the 90 dollar barrel for the first time after August. Following the control of Democrats in the U.S. medium-term elections, the expectations in the market have risen in peace negotiations between the U.S. and Iran, which have been shown at oil prices
Usually this year the move of gold and crude oil remained opposite each other. The rising prices of energy have aired the inflation and enhanced the chances of strict monetary policy, making pressure on gold as there are no interest income on gold. However, the recent deterioration in crude oil has made this pressure somewhat lower. While the dollar weakness is also making gold cheaper for investors holding other currency
Statement of Fed Officers and Landscape of Interest Rates:
The further edge in gold may face blockage from the inflation concerns of the Federal Reserve. Fed authorities have constantly reiterated that it is extremely important to overcome rising prices, and traders from the market continue to standardize the entire potential of another growth in interest rates in December. Speaking in London on Tuesday, the Fed Governor Christopher Waler said that if the inflation figures come cold by estimates, the rates will be corrected to increase. They also added that if the figures come hot, the rates can also be increased by half per cent (0.50%)
Oston Guolsby, chairman of Richmond Fed Tom Barkin and Chicago Fed, has also emphasized the robustness of the U.S. economy and the inflation sustained. This indicates that monetary policy may need to be strictly maintained. According to the CME FedWatch tool, traders are now deemed to have a rate increase of 0.25% in December almost fixed, allowing the main Fed Funds to reach a scope of 4% to 4.25%
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Findings for Gold traders:
The new environment for gold traders is to be alert. The invasive stance of the Federal Reserve and an increase in interest rates is breaking at the upper speed of gold. US inflation figures will decide that gold will return to the level of $4,130 again or the pressure of the sell will pull it down further. It is therefore necessary to monitor the move of the US data and the dollar index before any new position