Gold continues to move higher this week. In Wednesday’s North American session, the spot price for one ounce of gold is $1252.76, up 0.27% on the day. On the release front, there are no major events out of United States. The markets are expecting the Federal Reserve to raise rates by a quarter-point. On Thursday, the U.S. publishes the Philly Fed Manufacturing Index and unemployment claims.
The U.S. dollar is under pressure, and gold has taken full advantage, gaining 1.3% this week. Earlier on Wednesday, gold touched a high of $1258, its highest level since mid-July. The gold rally could continue if Fed policymakers deliver a dovish message in the rate statement. With the U.S. economy showing signs of slowing and the stock markets showing sharp losses of late, the Fed may temper the rate hike by sounding dovish about the economy and future rate hikes.
A rate hike on Wednesday is widely expected, but is by no means a given. Just one week ago, the CME Group set the odds of a rate hike at 80%, but this has fallen to 69%. This concoction of a rate hike served with a dovish stance could shake up the U.S. dollar, so traders should treat the Fed statement as a market-mover. If the Fed statement is more dovish than expected and unnerves investors, investors could flock to safe-haven assets like gold and keep the current rally alive.
