International gold prices edged higher, but bulls need to run for their lives as soon as possible, FED tone changes significantly

Cruise Nov 25, 2021 06:45:13 GMT
Leads´╝ÜInternational gold prices edged higher on Nov 25 as the DOLLAR index came under pressure, but hawkish views from FEDERAL Reserve policymakers dented gold's appeal and kept it below the psychologically important $1,800 level. San Francisco Fed President Mary Daley said on Wednesday she was open to ending the bond-buying program more quickly if employment and inflation data hold steady, and she expects the Fed's policy-setting committee to raise rates once or twice next year. Mr. Daley is seen as the fed's most cautious policymaker.
International gold prices edged higher on Thursday (Nov 25) as the DOLLAR index came under pressure, but hawkish views from FEDERAL Reserve policymakers dented the metal's appeal and kept it below the psychologically important $1,800 level. Spot gold rose 0.23% to $1792.63 / oz at 14:42 GMT. The main COMEX gold futures contract rose 0.45% to $1795.0 an ounce. The DOLLAR index fell 0.07% to 96.731. Gold is down 4.5 percent from last week's five-month high. Minutes from the Fed's November policy meeting, released overnight, showed more policymakers signaled they were open to speeding up the end of their bond-buying program and a move toward higher interest rates if inflation remained high. At the current pace, tapering will be completed by June next year. But since the last meeting, a growing number of policymakers have called for a faster pace as inflation remains high and the labor market strengthens. The number of Americans filing new claims for unemployment benefits fell last week to the lowest level since 1969, a sign that economic activity is accelerating. Michael Feroli, chief U.S. economist at jpmorgan chase in New York, said: "[The Fed] could have easily brushed this issue aside in May, but they've looked at it more and more seriously every month since. Given the improving labor market... As they get closer to full employment, they may feel more comfortable taking action." The persistence and build-up of price pressures caught both the White House and the Fed by surprise and prompted a response. President Joe Biden and Federal Reserve Chairman Jerome Powell stressed earlier this week that they would take steps to address rising prices for everyday items like food, gas and rent. San Francisco Fed President Mary Daley said on Wednesday she was open to ending the bond-buying program more quickly if employment and inflation data hold steady, and she expects the Fed's policy-setting committee to raise rates once or twice next year. Mr. Daley is seen as the fed's most cautious policymaker. Hitesh Jain, analyst at Yes Securities, said: "This should weigh on gold prices in the short term as the market has priced in some monetary policy normalisation. But major central banks are unlikely to raise rates significantly given the fiscal burden of high interest rates and the huge amount of accumulated government debt." As a result, Jain added, economic momentum is likely to lose momentum next year as the base effect of allowing the economy to bounce back after the pandemic wanes, and central banks' adherence to a moderate monetary policy normalization process should support gold prices longer term.

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