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Market participants wait for the Federal Reserve to release “dot plot” tomorrow

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The Federal Reserve will conclude the September FOMC on Wednesday. The meeting will be capped with a new policy statement and interest rate decision which will be released at 2 PM EDT and a press conference by Chairman Powell to be held at 2:30 PM EDT. The Fed is not expected to raise interest rates according to the CME’s FedWatch tool, there is a 99% probability that the Fed will not raise their benchmark (Fed funds) rate tomorrow.

Nonetheless, investors will be able to gain insight into the internal thinking of Federal Reserve members in addition to Powell’s press conference tomorrow’s statement will include the Fed’s upcoming forecast in the Summary of Economic Projections or “dot plot. Every three months since January 2012 the Federal Reserve has updated its “dot plot”. This document provides analysts and investors with the Federal Reserve’s economic forecast for the current year as well as two years ahead.

According to a publication by the Federal Reserve Bank of San Francisco, “The Summary of Economic Projections offers important insights into the views of Federal Open Market Committee participants. The summary’s “dot plot” charts each participant’s assessment of the appropriate path for monetary policy given their economic outlook.”

Analysts and investors will use the “dot plot” to see the consensus by Fed members regarding additional interest rate hikes. In particular, they will look to the outlook of each of the 18 voting officials to see if they believe that they have raised rates high enough to put inflation on a defined path to their 2% target, or whether an additional rate hike might be warranted.

In June the Federal Reserve announced a pause in interest rate hikes. However, the quarterly economic projections that accompanied that decision revealed that 12 out of the 18 voting members anticipated two more ¼% rate increases by the end of this year.

Gold prices consolidated today after closing above its prior closing price for the fourth consecutive day. On Thursday, September 14, gold traded to its lowest value taking gold futures to a low of $1921.70. However, gold recovered and closed at approximately $1933. On Friday gold finished the week with a solid gain of $13. On Monday gold opened at approximately $1945.90 and closed at approximately $1953.

Today gold futures traded to a higher low, and a higher high than Monday’s pricing. However, gold prices consolidated as traders waited for tomorrow’s decision on monetary policy by the Federal Reserve. As of 5:00 PM EDT, gold futures basis the most active December contract is currently trading a dollar higher to a dollar lower when compared to yesterday’s closing price, and futures are fixed at $1953.70 after factoring in today’s gain of $0.30.

Wishing you as always good trading,

Gary S. Wagner - Executive Producer