Gold prices remained relatively unchanged on Wednesday, with XAU/USD hovering around $1,980.00. The financial market is in a wait-and-see mode ahead of the Federal Reserve's monetary policy announcement, the final one for 2023. Back in September, the Summary of Economic Projections (SEP) or dot plot indicated officials still projected a final rate higher than the current 5.25%-5.50% rate. However, policymakers have tempered rate hikes in the two most recent meetings, and the likelihood of a rate hike today is almost negligible.
Interest rate futures have long been priced at the tail end of tightening monetary policy, disregarding officials' warnings against it. Furthermore, investors are predicting multiple rate cuts in 2024, starting as early as the second quarter. The SEP will then define the direction of the US dollar, as this document may illuminate what policymakers believe could unfold in the coming years.
In addition, Chairman Jerome Powell will hold a press conference to explain the Federal Open Market Committee's (FOMC) decision. Powell's words will also be scrutinized for hints about future actions. The US dollar might react to market sentiment, decreasing in value if investors become more optimistic and opt for higher-yielding assets.
Interest rate futures have long been priced at the tail end of tightening monetary policy, disregarding officials' warnings against it. Furthermore, investors are predicting multiple rate cuts in 2024, starting as early as the second quarter. The SEP will then define the direction of the US dollar, as this document may illuminate what policymakers believe could unfold in the coming years.
In addition, Chairman Jerome Powell will hold a press conference to explain the Federal Open Market Committee's (FOMC) decision. Powell's words will also be scrutinized for hints about future actions. The US dollar might react to market sentiment, decreasing in value if investors become more optimistic and opt for higher-yielding assets.
