Price of Gold Fundamental Daily Forecast – Weak Trade Indicates Gold Bulls Wanted More From Fed

Gold futures are trading lower on Thursday after the U.S. Federal Reserve disappointed expectations for further stimulus to spur inflation and support the economy, battered by the coronavirus pandemic.

Also reducing gold’s appeal for investors holding other currencies, the U.S. Dollar Index rebounded to a more than one-week high after the Fed pointed to a faster economic recovery, with unemployment falling more quickly than forecast in June.

At 11:00 GMT, December Comex gold futures are trading $1948.00, down $22.50 or -1.14%.

But keeping a floor under non-yielding gold, the Fed pledged to keep rates pinned near zero levels until inflation was on track to “moderately exceed” its 2% inflation target “for some time.”

In other news, the Bank of Japan kept monetary policy steady on Thursday and suggested there would be no immediate expansion of stimulus.

Fed Releases New Policy Statement

The U.S. Federal Reserve released its monetary policy statement at 18:00 GMT on Wednesday. Central bank policymakers kept interest rates pinned near zero and promised to keep them there until inflation is on track to ‘moderately exceed” the U.S. central bank’s 2% inflation target “for some time.”

The change in guidance was in line with the Fed’s monetary policy shift announced last month that is aimed to offset years of weak inflation and allow the economy to keep adding jobs for as long as possible.

This week’s Federal Open Market Committee (FOMC) meeting was the last before the U.S. Presidential election in November and contained a multitude of information that affects both the short-term and long-term aspects of the economy as well as across all markets from commodities to stocks.

Daily Forecast

Today’s price action suggests that traders were disappointed by the lack of guidance from the Fed and what it will do to spur inflation. Traders were hoping policymakers would pinpoint a strategy that highlighted the need for more stimulus. Essentially, they said a lot, but didn’t announce any major changes, instead they seemed to be indicating the need for more fiscal stimulus to smooth over the recovery.

As far a monetary policy was concerned, they seemed to adopt a “Let’s wait and see how things develop.”

Despite today’s weakness, gold is likely to remain rangebound over the near-term. The market should be supported by the Fed’s vow to keep rates low over the long-run, but gains could be capped by the lack of fresh stimulus from the government and central bank.

For a look at all of today’s economic events, check out our economic calendar.