Fed, US stocks and EU trade deal
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Gold could hit $4,000 an ounce by the end of next year as the Federal Reserve cuts rates to cushion the US economy, the dollar drops, and central banks keep adding holdings, according to Fidelity International.
The Fed is widely anticipated to keep its key interest rate unchanged at 4.25% to 4.5%, the same as it has been since December. According to the CME FedWatch tool, Fed Funds futures traders are pricing in nearly a 97% possibility of no change to interest rates at the July meeting.
The U.S. dollar advanced on Friday, bolstered by solid economic data that suggested the Federal Reserve could take its time in resuming interest rate cuts, while tariff negotiations showed more clarity that eased some uncertainty in the market.
Emkay Wealth Management stated, Until there is greater clarity on US tariff policy and inflation outlook, the Fed is unlikely to commit to any major rate moves. Interestingly, the real momentum in currencies is shifting outside the US-driven by proactive policy responses and improving macro fundamentals.
There’s a powerful weapon President Trump can wield in his fight against the Fed that would be positive for that institution and the economy.
The U.S. dollar advanced on Friday, bolstered by solid economic data that suggested the Federal Reserve was justified in taking a patient approach to cutting interest rates, while tariff negotiations showed more clarity.
No fiat currency can be an alternative to the US dollar if the government is more fiscally imprudent, institutions are less independent and capital markets less open than in the United States.
For background, contemplate a recent New York Times opinion piece by former Federal Reserve Chairs Ben Bernanke and Janet Yellen. While they’re no longer at the central bank, their ideas about inflation remain. And what they imagine inflation to be speaks to the real problem at the Fed.
The currency’s uncharacteristic behavior is another reason for Powell to ignore Trump and stay cautious on rate cuts.
Melbourne – Gold could hit US$4,000 an ounce by the end of 2026 as the Federal Reserve lowers interest rates to cushion the US economy, the US dollar drops and central banks keep expanding holdings, according to Fidelity International.
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