The Federal Reserve's decision has landed. Overnight, London spot precious metals surged before rapidly retreating, with intraday losses exceeding 2%. Waller's debut was more hawkish than expected, which, from a results-oriented perspective, is bearish for gold. However, given that this was largely priced in beforehand, the short-term negative impact may not be sustained. Yet, from the perspective of interest rate hike expectations, the bearish influence could be more medium-term. Additionally, with the signing of the US-Iran memorandum of understanding, market focus may shift to navigation issues in the Strait of Hormuz and crude oil prices, which in turn will be used to predict interest rate trends. Overall, gold may continue to experience range-bound fluctuations at lower levels.
Overnight, market focus was on the Federal Reserve's interest rate meeting. The results showed the Fed, as widely expected, kept interest rates unchanged for the fourth consecutive meeting. The decision received unanimous support from FOMC voting members for the first time in nine months. However, Waller's debut as chair indicated the Fed maintains a hawkish bias. The dot plot revealed that half of the voting members believe there should be one rate hike within the year. Furthermore, the decision statement removed interest rate guidance, stating a commitment to achieving price stability. It also lowered this year's GDP growth and unemployment rate forecasts, while raising the 2024 PCE and core PCE inflation expectations to 3.6% and 3.3%, respectively.
On the geopolitical front, US officials stated that the US and Iran have remotely signed a memorandum of understanding aimed at ending the war and opening the Strait of Hormuz, and the agreement is now in effect. An Iranian Foreign Ministry spokesperson said the text of the current memorandum of understanding between Iran and the US has been formally finalized and signed by both sides.
Comments