2016-11-24 11:26:51

According to the minutes of FOMC meeting leaders of the Fed system believe that the interest rate increase may take place in the nearest future, provided that economic statistics will indicate improvements in the US economy.

Some of the Fed members think that the rate hike may take place at the next meeting.

Expectations of the rate hike in December have increased because of the positive economic data and also the plans of the US President to cut taxes and increase public spending. Before the publication of the minutes on Wednesday, futures for the Fed interest rate showed 98% probability of the rate hike in December. Today this probability is estimated at 94%.

The Fed had raised interest rates of the Federal funds from zero to 0.25%-0.50% last December.

Economic data released after FOMC meeting in November was strong and the indices of employment rate, retail sales and housing market have shown improvements in the US economy. On Wednesday, US Commerce Department released the data demonstrating that the orders for durable goods in the U.S. increased to the annual highs in October. Orders for durable goods have grown by 4.8% in October.

On Wednesday the index Wall Street Journal has increased by 0.6% to 91.87, which are the highs since 3 December 2002.

Consumer sentiment in the USA has also improved in November.

Trump's victory at election triggered the rise in stock indices, bonds and the USD. It has also significantly changed the prospects of fiscal, trade and regulatory policy.

The plan proposed by Donald Trump to cut taxes and increase public spending may lead to inflation, which may create conditions for further interest rate increase by the Fed.

The rate hike usually causes the decline in gold price, as gold does not bring interest income, and cannot compete with the assets generating this income, such as government bonds.

Investors’ risk appetite and withdrawal of funds from safe-haven assets have led to a significant rise in the USD and sales of gold.

Expectations of the interest rate hike trigger the decline in gold price despite ongoing global political and economic instability.XAU/USD: interest rate increase may take place at the next meeting of the US Fed.  Fundamental analysis for 24/11/2016