Gold prices surge ahead of Fed interest rate decision – What’s next? [Video]
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The first FOMC Policy Meeting of 2024 and quite possibly, the most highly anticipated “interest rate decision” in monetary-policy history is finally here.
There is no deny that the Federal Reserve is running out of good excuses to stay hawkish – positioning Interest rate cuts firmly among one the major macroeconomic themes of 2024.
This year, more than 60 central banks around the world are expected to join the global race to cut interest rates at the sharpest paces since the global financial crisis in 2009.
Traders are pricing either a cut or no change in rates at the upcoming policy meetings of all the 60 major central banks tracked by analysts at GSC Commodity Intelligence.
GSC Commodity Intelligence also expects more than 400 basis points of rate cuts by the end of the year across the Federal Reserve, the European Central Bank and the Bank of England – the largest cumulative rate cut in 15 years.
Taking front and centre stage this week will undoubtedly be the outcome of the Federal Reserve’s two-day Monetary Policy Meeting.
When the Federal Reserve concludes its first monetary-policy of 2024 on Wednesday – the committee may tweak its guidance on interest rates, dropping a reference to a possible “firming” of rates in favour of something neutral, such as “stance of policy”.
In the meantime, the Federal Open Market Committee is expected to leave its benchmark rate unchanged at a 22-year high for the fourth consecutive meeting in a row.
At the press conference following the rate decision – Fed Chair Jerome Powell is likely to be pressed on whether the Fed is considering rate cuts for March and if the committee’s median forecast in December for three quarter-point reductions this year is still a good reflection of officials’ views.
According to data tracked by GSC Commodity Intelligence – traders are currently pricing in five or more rate cuts throughout 2024 – paving the way for much larger and sharper rate cuts in 2025.
Whichever way you look at it, one thing is clear. Interest rate cuts are coming! The big question now is how big and how many rate cuts will happen this year?
Only time will tell, however one thing we do know for certain is that “the bigger the rate cut, the bigger the rally in precious metals”.
If history is anything to go by, then Gold’s record-breaking performance seen last year could just be a taster of what is yet to come in 2024. That’s welcoming news for the bulls, but painful for anyone sitting on the sidelines, who must now decide how much FOMO they can handle.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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