Gold price wavers as investors turn anxious ahead of Fed’s policy – by Sagar_Dua24 Gold XAUUSD Fed PMI SEO
by the Federal Reserve due Wednesday. An interest-rate hike of 25 basis points looks certain, but the catalyst that is haunting investors’ sentiment is the guidance about future rate hikes and discussions about rate cuts.Index struggles to climb among the immediate resistance of 101.40 as recession fears have eased. In light of tight labor market conditions and easing inflationary pressures, the odds of a recession have faded to some extent.
Investors expect that July’s interest-rate hike will be the last one in the current tightening cycle. The United States manufacturing sector failed to come out of the contraction territory. The preliminary Manufacturing PMI for July landed at 49.0, higher than expectations and the former release of 46.3. A figure below 50.0 signals a contraction in factory activity.
This week, the US economic calendar is full of economic events as the Fed policy will be followed by second-quarter Gross Domestic Product data and June’s Durable Goods Orders. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar as it makes the US a more attractive place for international investors to park their money.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
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