Fed meeting outlook: Traders predict quarter-point rate cut
Upcoming FOMC meeting scheduled for Dec. 18 is expected to bring lower interest rates in the U.S., which should help boost the price of gold
American traders are pricing in about an 85% chance of a quarter-point rate cut at next week’s FOMC meeting of the Federal Reserve set for Dec. 18. The vast majority of the remaining 15% expect rates to stay the same, according to CME’s FedWatch tool.
Goldman Sachs, which has been bullish on gold for at least a year, said in a note that one of the biggest downside risks for gold in 2025 would be fewer rate cuts, according to a recent Reuters report.
“Gold could rise to just $2,890 an ounce if the Fed cuts only one more time,” a note from the bank states.
Precious metals prices are off of all-time highs following a monthlong period of stagnation following the election of former U.S. President Donald Trump to another term, set to begin in early 2025.
StoneX analyst Rhona O’Connell said gold’s lack of movement could be shortlived, as signs of a revival are beginning to take hold. She said the regime change in Syria along with China’s continuing of gold purchases will help to push prices higher.
Looking backward
Let’s take a look at how gold reacted to the last FOMC announcement:
Prices rose briefly during the Federal Reserve’s 2 p.m. meeting of the FOMC, but shortly after an appearance from Chair Jerome Powell prices began to drop almost 1%. The board agreed to set the federal funds rate at 5%, decreasing a quarter-point from the last meeting in September, which featured a surprising half-point cut.
The U.S. dollar also fell in the lead-up to the November meeting,
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