All Roads Lead to the US: What’s the Future of the US leading up to the Fed meeting? 

With all eyes on the Federal Reserve, the fed meeting and their rate hike, the stakes are truly high for the global markets. 

December 12th - 13th will be the summarization of the Economic projection for the fed and as traders wait for the reports, let's discuss what are the main focal points for this discussion. 

FED Chair Jerome Powell's Outlook: 

The FED chair Jerome Powell has been clear from the very beginning concerning his decisions on the central bank staging a 2 part inflation fight. 

Until this moment, it's always been how high the interest rates go and the length at which it's going to be maintained.

The Previous Fed Meetings and Changes Thereafter:

Util last month, the only focus of the Fed was to bring down inflation rates to their target of 2%, but something had changed. 

After the meeting, the FED showed that the committee emphasized how the high-interest rates have been squeezing households and businesses in America. 

Hence, there has been a change in the outlook of the economy concerning the citizens. 

What's the Forecast on Fed Fund Rates? 

As per the source, policymakers on the Federal Open Market Committee are expected to leave interest rate alone for the third consecutive meeting. Jerome Powell and the members have paused since July after seeing the highest benchmark rate of 5.25 - 5.5 per cent. 

Even though there is fear over experiences faced by the US during the 1970s and 80s, the policymakers might just make decisions according to it. 

FOMC economic projections:

One of the highlights of this meeting will be the economic projections that will be updated by the FED. 

The FOMC during its December meeting, will be updating its long-term US economic growth projections, which included a forecast for GDP growth, unemployment rates, interest rates and also inflation. 

In the month of September, the Fed had provided its recent economic projection and it was something like this: 

• 2024 US GDP growth of 1.5%

• An unemployment rate of 4.1%

• Fed's previous core personal consumption expenditures (PCE) price index measure of inflation has been reduced from 3.9% to 3.7%. 

In recent months, the US credit card delinquency rates and balance have risen and savings rates have dropped. Even though several alarming trends exist, the economic growth data has been solid throughout 2023. 

On November 3, the US Labor Department had reported the following: 

• 150,000 jobs in October were added, missing economist estimates of 170,000 jobs. 

• The US unemployment rate climbed to 3.9%, while the labor participation rate declined slightly to 62.7%. 

• Average US wages were up 4.1% from a year ago and up to 0.2% compared to September. 

Fed Fund Rates Anticipation - What to Watch? 

Coming towards the recent data, the Fed's preferred gauge of inflation, the Personal Consumption Expenditure Price Index, hit 3 per cent from a  year ago in October. 

Simultaneously, employers had created over 199,000 jobs in November, while the unemployment rate slid to 3.7 per cent as per the Department of Labour. 

So the question on everyone's mind is will the Fed prepare the US for a soft landing in 2024? 

Geopolitical Perspective from Commodity Samachar: 

Fed Meeting Impact on Gold and Silver - Technical Outlook:

The market has been awaiting the FOMC meeting with open eyes and ears. Our analysts at Commodity Samachar had this to say about the position of commodities with respect to the FOMC meeting:

"When we take a closer look at the previous FED meeting in November, the expected interest rate was maintained and as an effect on of this we got to see upside movement in gold.

Similarly, everyone is aware that the Fed rates will be left unchanged and as a result traders could see slight stability and ensuing that a bit of volatility.

If the current market position is going on in buying gold, the support will be between $60700 - $60000.

Similarly when we talk about silver, the support will be between $71300 - $78000."

That's all for now. I'll be back with more commodity analysis soon.

Until then, Happy Trading!!

Commodity Samachar

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Previously Published on Commodity Samachar

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