Will The FOMC Meeting Minutes Drive Gold Prices Higher Or Lower?

Phil Carr
Published: May 24, 2023, 15:23 GMT+00:00

After notching up an impressive gain of over 32% this year, Gold prices have pulled back from all-time highs as trader’s bank windfall profits and assess the precious metals next big move.

Gold, FX Empire

In this article:

Gold’s Parabolic Rally and Influence from Rate Hikes

Since the final quarter of 2022, Gold has been on an absolute tear, rally from just under $1,600 an ounce to a new all-time high of $2,082 an ounce this month – posting its best start to the year in over a decade!

Once again, these big market moves have presented savvy traders with a series of highly lucrative opportunities to profit from the parabolic rally as well as the huge price reversal that has subsequently followed.

Looking ahead, all eyes will be on the Federal Reserve’s Monetary Policy Meeting Minutes, due for release on Wednesday.

Earlier this month, Gold prices surged to a new record high after the Federal Reserve raised its benchmark interest rate by a quarter of a percentage point – to a target range of 5% to 5.25%, the highest level since 2007.

The Fed’s tenth consecutive interest rate hike in just over a year, sent shockwaves through the financial system, triggered a significant sell-off in the broader banking sector.

On the flipside, the Fed’s relentless “hike, hike, hike” strategy bolstered demand for safe-haven metals and sent Google searches for the phrase “How To Trade Gold” to the highest level on record ever.

Fed’s Aggressive Rate Hiking Campaign and Global Banking Crisis

That comes as no surprise when you consider conclusive evidence shows that the Fed’s aggressive interest rate hiking campaign over the last year has fuelled a global banking crisis, credit crunch and paved the way for a recession.

But yet, after 525 basis points of tightening – the Fed might not be done yet!

The stubbornness of high inflation is dividing the Federal Reserve over how to manage interest rates in the coming months, leaving the outlook for the Fed’s policies cloudier than at any time since it began raising rates back in March 2022.

Last week, a number of top Fed officials expressed the need to continue raising interest higher as ‘insurance’ against inflation.

And that’s the exact “Devil in the Detail” that trader’s will be looking out for in the May FOMC Meeting minutes.

As always, the FOMC Meeting minutes will be highly scrutinized by traders for clues into the central banks future monetary policy plans. But most importantly, whether the hawkish comments recently made by several voting members of the Fed’s policy-setting committee match up with the notes from the latest Meeting Minutes or completely contradict them.

Gold Price Forecast for May 24, 2023

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

About the Author

Phil Carrcontributor

Phil Carr is co-founder and the Head of Trading at The Gold & Silver Club, an international Commodities Trading, Research and Data-Intelligence firm.

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