Market Snapshot – All Eyes on Powell and the Fed

Gold Awaits Fed

All eyes are on the Fed today as Powell takes centre stage. He has taken over from Yellen as the new Fed Chief only last month and hence the market would be all ears to know his line of thinking and what he feels about the monetary policy, the rate hikes and also the economy as a whole. We have the Fed rate announcement before that and then the FOMC statement as well and it is widely expected that the Fed would hike rates for the first time this year today. The market also anticipates accelerated rate hikes during the course of the year but it is here that the Fed is likely to let down the market, atleast as far as today is concerned. Gold prices have been very choppy since the morning of today as the traders await the Fed. The gold prices have been caught between the 1300 and the 1360 region for several weeks now and the market would need a huge surprise from the Fed or Powell for the traders to be able to push the gold prices through this range, else we are likely to see the gold market continue to consolidate and range within the larger market range, irrespective of the volatility.

Equity Markets Under Pressure

The equity markets are also under the shadow of the Fed but whatever they decide, we believe that the effect of that on the stock markets would be there only for the short term. Anything more than that would be unreasonable to expect from the markets as they are likely to be swayed more by the fundamentals and the threat of a global trade war breaking out due to the plan of the US to impose tariffs on goods from China and from other countries as well. This is likely to add pressure on the stock markets than the Fed decision.