That moved markets in early trading but the move was reversed as traders saw Rosengren’s comments as simply increasing the odds of a rate hike in December, which was already priced into the dollar, analysts said.
Advertisement
The dollar index was flat at 95.472 on the day. However, when the weakness that we predicted would happen this month indeed materialized, many were understandingly misled by bankers that painted a head and shoulders pattern in both the HUI Gold Bugs Index and the Global X Silver Miners ETF, into interpreting such a pattern to mean that an imminent significant further drop in gold and silver stock prices was on the way. The week ahead promises substantially less foreseeable event risk, and the USD/JPY may continue its broader trend lower absent material surprises out of a handful of USA and Japanese economic data releases.
Minneapolis Fed President Neel Kashkari, responding to questions from the public on Twitter, said he believed the labor market continues to have slack and that he wanted to see the unemployment rate, now at 4.9 percent, to come down.
USA stock indexes opened lower on Friday but were poised to end the week higher after a three-day rally spurred by optimism that the Federal Reserve will hold off from raising interest rates in the near term. However, the big news for gold this week was the US Federal Reserve’s decision to stay put on interest rates. “This reflects an understanding that the Fed isn’t about to raise rates for at least three months”.
The Fed will have three monthly government reports on the state of the US labor market in hand before its meeting in December, when many traders and economists expect it to finally pull the trigger on a rate hike.
The US central bank had hinted that it might raise rates before the year ends and interest rate futures were pricing in roughly a 60 percent chance of a rate increase by December.
The Federal Reserve projected a less aggressive rise in rates next year and in 2018, and cut its longer-run interest rate forecast to 2.9 percent from 3.0 percent. Spot gold was down 0.1 percent at $1,334.68 an ounce at 0930 GMT, but was almost 2 percent higher on the week.
– Silver futures slipped on the Comex in NY.
Advertisement
Recent softness in the manufacturing and service sectors, stubbornly low levels of inflation, and a fresh memory of how markets reacted last time the Fed raised rates may be tethering the central bank to emergency policies that were originally initiated to deal with the financial crisis of 2008.
