Gold prices hit two-month high as traders await Fed’s next move – What’s next? [Video]

The major macro event that traders will be closely watching on Wednesday is the outcome of the Federal Reserve's first Monetary Policy Meeting of 2022. This will be followed by a press conference chaired by Jerome Powell, which always has the potential to spark big moves across the markets.

After having more than doubled the size of its balance sheet to over $9 trillion since the start of the pandemic – expectations are running high that the Fed will announce its first interest-rate hike since 2018, as early as March in a desperate push to tame red-hot inflation.

One thing to watch out for in the U.S central banks expectations of inflation in 2022.

It is very clear that the current inflationary impulse is going to be far stronger than what the Fed was anticipating only a couple of months ago. There is now an enormous gap between current levels of inflation and where the market thinks inflation is going to be in five or ten years from now. If traders start to see further signs that inflation will be more permanent, then that's going to start to cause some big challenges for the Federal Reserve.

Regardless of how many times the Fed raises interest rates, high inflation still means that real rates are negative. That remains extremely bullish for Gold prices head.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: