"I therefore believe that the broader outlook for gold today is a direct result of the interaction of three main forces: the Federal Reserve's tight monetary policy, the strength of the US dollar, and a turbulent economic environment marked by concerns over government shutdowns, weak data, and slowing growth. As such, reading gold's movements cannot rely on short-term price direction or temporary momentum, but rather on a deep understanding of the dynamics shaping risk appetite and redefining expectations for monetary policy."
"However, that momentum quickly faded after cautious and hawkish statements from key Federal Reserve members, led by Kansas City Fed President Jeffrey Schmid, who made it clear that inflation remains far from target levels and that it is not yet time to discuss an imminent rate cut. From my perspective, these remarks were not merely reminders of conventional monetary policy but a direct message aimed at preventing markets from pricing in early easing, especially as inflation remains at levels the central bank finds uncomfortable."
Gold's price action remains confined to a sensitive range driven by Fed tight monetary policy, a strong US dollar, and economic turbulence including government shutdown risks, weak data, and slowing growth. Early-week momentum from investor hopes for imminent monetary easing dissipated after hawkish remarks from Kansas City Fed President Jeffrey Schmid, who said inflation remains far from target and rate cuts are premature. The stronger dollar, boosted by fading rate-cut expectations and a widening policy gap, raises costs for foreign buyers and reduces gold's safe-haven appeal. Accurate interpretation of gold requires assessing shifts in risk appetite and evolving policy expectations rather than short-term momentum.
Read at London Business News | Londonlovesbusiness.com
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