Once the markets were able to process Fed’s accelerated tapering, which was well telegraphed, Wall Street knew about the massive shock you are going to see when Fed is done buying assets,” OANDA senior market analyst Edward Moya told Kitco News.
There is an idea that the Fed is setting itself up to fall short of those expectations,” said Gainesville Coins precious metals expert Everett Millman.
That’s the classic playbook for the Fed — try to use rhetoric and public communications to influence market behavior without having to change monetary policy.
“There are many risks next year, where the Fed could walk back this hawkishness and have very legitimate reasons to say that they’re going to keep stimulus in place or they’re not going to raise interest rates.
In 2023, we are back to around 2% growth and we still have several risks to the outlook.
Any hint of unbalanced economic recovery or delay in the tightening cycles would be supportive for gold,” Moya noted.
“One thing that could trigger a strong move in gold is if we see Omicron jitters settle in, could trigger panic selling.
“We’re at the end of the month, end of the quarter, and approaching the end of the year.
Once January begins, Millman is more bullish but does point out that gold could still be stuck in its trading range between $1,850 and $1,750 an ounce.
“The last couple of weeks of 2021 will see the release of durable goods orders, which are rebounding impressively.