The Ultimate Guide to FOMC Rate Cut Expectations and Their Impact on Gold and Other Metals
As the world's best investment manager and financial market journalist, I am here to give you the inside scoop on the potential shift in sentiment favoring a 50 basis point rate cut by the Federal Open Market Committee (FOMC) this week. This unexpected move could have a bullish effect on in the short term, according to HSBC analysts.
While expectations for total rate cuts this year remain unchanged with a 25 basis point cut anticipated, the FOMC will also update its projections for real GDP growth, unemployment, inflation, and policy rates. HSBC predicts minimal changes to GDP growth and inflation projections, but unemployment forecasts may shift slightly.
The FOMC is expected to lower its median projection for the federal funds target range by the end of 2024 and 2025, aligning with forecasts for additional rate cuts in the months ahead. If the FOMC does cut rates by 25 bps on Wednesday, it could benefit the , especially given market pricing for larger rate cuts and signs of excessive short USD positioning.
However, analysts caution that a rate cut could weigh on gold, as technical indicators suggest the market may be 'overbought.' Despite this, Wednesday's FOMC decision is not the only market focus this week. Data releases such as U.S. retail sales, industrial production, housing starts, jobless claims, and the leading index, as well as UK and Japan economic data, could also influence gold, silver, and Platinum Group Metals (PGMs).
In conclusion, understanding the potential impact of FOMC rate cut expectations on various metals and staying informed on key economic data releases can help investors make informed decisions and navigate the ever-changing financial markets. Stay tuned for more updates and analysis from the world's best investment manager and financial market journalist.