It is becoming increasingly likely that the Federal Reserve will hit pause on its rate hike policy within the next few weeks – a move that will unleash a tidal wave of bullish momentum.
The U.S. dollar is feeling the fall out from the disappointing economic data hitting headlines this week, with increasing unemployment and falling manufacturing activity seeing the greenback lose ground to currencies including the euro and yen.
Wells Fargo macro strategist Erik F. Nelson said that the writing is on the wall for the world’s biggest economy. He said, “It’s increasingly clear that the U.S. economy is headed for recession. It’s just a matter of time. The challenge for the market here is, how far in advance do you want to price that? It’s challenging to price that in the rates and FX markets if the Fed is going to continue to hike.”
While no one is sure what the Federal Reserve’s reaction will actually be, there’s now a 69% probability that May will mark the last rate hike to be enacted – for a while at least. That’s significant for gold as the yellow metal has been waiting for that confirmation for a while now – it is widely expected that the bulls will be unstoppable as soon as the Feds hit pause. Buy now.
