FED Announces Pause in Interest Rates

Following the recent rate hikes by the Reserve Bank of Australia and the European Central Bank, the Federal Reserve (FED) has provided some relief to US mortgage holders by announcing a pause on interest rate increases. US FED emergency bank borrowing has continued its upward trend, marking the sixth consecutive week of growth with an increase of $2.3 billion, reaching $105.6 billion.

While FED Chair Jerome Powell delivered positive news regarding interest rates, the overall tone of the announcement remained firm. The FED indicated the likelihood of two more rate increases this year, totalling 0.5%, with the aim of reaching a benchmark rate of 5.75%.

Examining the latest Consumer Price Index (CPI) figures released this week, it becomes evident that inflation remains persistent. However, it is important to note that when looking closer, the specific recent monthly CPI measurement was a modest 0.1%. If annualised, this would result in a CPI figure of only 1.2%, falling well below the US target range of 2-2.5% for inflation. Continuing to raise rates will lead to a potential economic downturn and could potentially strain certain sectors of the economy.

In times of economic stress, precious metals have historically shown resilience. In response to the FED's recent announcements, we witnessed an immediate dip in the price of Gold, followed by a strong recovery back within its weekly trading range. Although bullion has not yet broken out of its trading range, there is growing potential for upward momentum in the charts.

Gold daily chart, with 200MDA

Gold weekly chart, with 200MWA

Gold Futures Technical Analysis

Gold Futures monthly analysis continues to recommend a STRONG BUY with Weekly analysis a NEUTRAL signal.

Technical indicators - Monthly Projections

Summary for Monthly Forecast: Strong Buy

Disclaimer

This news and any links provided are for general information only and should not be taken as constituting professional advice from Jaggards. Jaggards is not a financial adviser. We recommend you seek independent financial advice before making any financial decisions based on the information contained in this article.