The Spot gold prices declined to $1,980 on Wednesday hours before the Federal Reserve’s decision on interest rate hike. Gold prices remained unmoved on Tuesday even after the CPI data showed inflation cooling down at 3.1%. The precious metal did not spike even after the US Treasury Secretary Janet Yellen said that the economy is headed for a “soft landing”. The development indicates that the markets will remain on a slippery slope until inflation is brought under control at 2%.
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The move adds burden on the Feds upcoming decision as the markets will now trade in tandem to the interest rate. While the US dollar dipped in December this month, gold performed exceptionally better in the last 30 trading days. Read here for a realistic price prediction on when gold could rise by 50% and reach the $3,000 mark.
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Gold Prices: Expect Volatility as Fed Rate Decision Nears
The XAU/USD Spot gold prices are trading lower as the Federal Reserve’s decision on interest rate hike nears. Investors are playing it safe by staying away for a while before taking an entry or exit position. Major volatility is expected to rock gold prices after the Fed rate decision as both buyers and sellers get aggressive. Read here to know what could be the prices of gold by the end of this month in December 2023.
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If the Feds raise interest rates, gold prices are expected to bounce back above the $2,000 mark. However, if the Feds go dovish, then the yellow metal might have a difficult month in the indices. The value of gold is shaped by the prospects of the US dollar. A strong US dollar makes gold weak, while a soft US dollar strengthens the prices of gold. The correlation remains intact despite other geopolitical tensions affecting the overall markets.