Market participants are bracing for the potential of more gains after next week

Members of the Federal Reserve tend to keep their future actions close to their chest showing little perspective about any upcoming changes to their aggressive monetary policy that has been in place since March 2022. Although they have announced that they plan to implement two more quarter-percent rate hikes by the end of the year, many investors, economists, and analysts believe that the Fed will lower the campaign rate next week. lationary pressures.

CME’s FedWatch tool delivered a very high probability of a rate hike this month but predicts a high probability that the next rate hike could be the Federal Reserve’s last this year. The probability that the Fed will raise rates next week grew from 96.7% a week ago, to 99.2% yesterday. Today the CME probability indicator is now predicting a 99.8% probability that the Fed will raise rates next Wednesday.

At the same time if you look at the three remaining FOMC meetings scheduled for this year there is a reasonable possibility that they will let rates stand between 5 ¼% and 5 ½% for the rest of the year. The probability now stands at 84.9% that the Fed will pause and leave rates at their current levels in September, followed by a 70.8% probability that they will continue to maintain those levels in November, and a 65.3% probability that by the end of this year, the Federal Reserve’s benchmark terminal rate will stand between 5 ¼% and 5%.

The question will be whether the written statement released after Wednesday’s meeting or comments made at the press conference by Chairman Powell point to the potential that their aggressive rate hikes could end? Members of the Federal Reserve especially the chairman have been very guarded when it comes to monetary policies in recent history. Powell’s remarks may not have hinted at that possibility or even mentioned whether such discussions are on the table between Fed members during the critical FOMC meeting next week.

It is this uncertainty that is once again moving gold to lower ground while at the same time strengthening the dollar. As of 6:20 PM EDT, gold futures underlying the most active August contract was down $7.00 and settled at $1963.90. Today’s settlement price is just above the 100-day simple moving average. But it should be noted that gold traded at an intraday low that fell below both gold’s 100 and 50-day moving averages.

The dollar continues to gain traction gaining 0.21% in trade taking the dollar index to 100.81. It is very possible that we see continued dollar strength and lower gold prices before the end of this month’s FOMC meeting on Wednesday. Although there will be a lot of speculation and speculation on the possibilities that could happen after the meeting in September, it seems unlikely that it will be revealed in the statement of the federal reserve issued at the conclusion or reflected in the words of Chairman Jerome Powell when he holds his usual press conference a ‘half an hour after the meeting.

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Disclaimer: The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, Kitco Metals Inc. cannot guarantee. or the author such accuracy. This article is for informational purposes only. Not a solicitation to make any exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accepts no responsibility for losses and/or damages caused by the use of this publication.

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