Gold Gains Ahead Of Fomc

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Gold Gains Ahead Of Fomc

Gold Gains Ahead Of Fomc Decision

Gold (XAU/USD) will trade above $2570 on Wednesday as the market awaits the long-awaited FOMC decision. Within the next few hours, the Fed will announce its monetary policy with a higher chance of a rate cut.

Ahead of the big decision, Gold (XAU/USD) is surging higher as the central bank is expected to double its rate cut. In simple words, the expectations of a 25 bps rate cut are now changed to 50 bps.

Gold (Xau/Usd) Enjoys Lower Rates

0.50% cut to the interest rate will be good news for Gold, Silver, and even the equity market around the world. Similarly, it will also give confidence to other central banks, and they will also start to move into the rate-cutting phase.

On Tuesday, Gold (XAU/USD) moved a little lower on stronger US Retail Sales for August. However, that has changed once again today as everyone is nervous about the outcome of the FOMC meeting.

Right now, there's a 100% chance that the US central bank will deliver a rate cut, and there's no doubt about it. The only question that is on everyone's mind is whether it will be a 0.25% or a 0.50% cut.

Recently, Bridgewater's CIO said that the US central bank will try to strike a balance between offering lower interest payments to debitors while also allowing the creditors to enjoy a higher real yield.

That's why Bridgewater's CIO believes that a 25 bps rate cut is the right thing to do at this time. However, if the Fed wants to offer relief to the mortgage sector as it affects a lot of people, then they could also go with 50 bps.

Regardless of the size of the rate cut, the outcome will be beneficial for the Gold (XAU/USD) and could help it cross the $2600 barrier with ease.

However, a surprise outcome would be no rate cut or a very deep cut worth more than 50 bps. In that case, the volatility will increase manifolds in Gold (XAU/USD) and other assets.

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