Gold finished Wednesday trading with steady growth, by almost 0.8%, on the background of a large-scale decline in the US dollar, which lost more than 0.65% in price and continues the negative trend today.
On Wednesday, the economic calendar was quite rich with important economic data, but traders almost ignored the published statistics throughout the day the day. At the same time, USD dollar was surprisingly stable, despite the release of weaker data. Thus, the re-assessment of the US GDP growth rate for the third quarter left the indicator unchanged, at 3.5%, while experts expected growth to 3.6%. Worse than expected were data on the trade balance and sales of new housing in October (a fact of -8.9%, while the forecast was + 3.7%). But the market was quite, because it traders were expecting Fed Chairman Jerome Powell speeches.
In Powell's speech, two main points are worth highlighting, which led to a significant increase in volatility, a weaker dollar and an increase in gold. The first one, Powell, on Wednesday announced that US interest rates remain “slightly below” the neutral value, at which they do not affect the change in the GDP growth rates. This statement is fundamentally different from the comments that Powell gave in October when he said that the level of rates was still far from neutral, a signal of continuing high rates of increase in the rate in 2019. Powell’s statements yesterday forced investors to reconsider their views, as the market now expects an earlier completion of the rate increase process, or a significant slowdown in the rate of increase in 2019. It is this statement that triggered the massive UDD dollar decline. Powell did not say anything more about further possible changes in rates, noting that by historical standards, their level remains low.
The second point - Powell in his speech did not refute the widely expected market rate increase in December. Therefore, екфвукы are still more than 80% likely to expect a rate hike at the December 19 meeting.
A possible change in the Fed's medium-term policy is a strong factor of pressure on the dollar and vice versa in the long term can have a rather strong positive effect on gold quotes.
Fed monetary policy will remain in focus today, as last FOMC meeting minutes will be published, which may shed light on the general mood of the meeting participants and help assess the prospects for changes in Fed policy.