Gold price going into Fed decision: selloff or test of $2k?

With Federal Reserve rate hike expectations see-sawing on mixed macro data, most analysts call for a pause in June but are not ruling out more rate hikes this summer. Here's what it means for gold.

The Fed is expected to keep rates unchanged at 5.25% next week, letting the lag effects of monetary policy tightening from the last 15 months take effect. The CME FedWatch Tool is pricing in a 72% chance of a pause at the time of writing. If the Fed does pause, it would be the first 'on hold' decision since January 2022.

On the other hand, any hawkish surprise could mean a steep selloff for gold, Ghali noted."Recent positioning raised implications of a surprise hike for next week. And a cohort of money managers might be vulnerable to that hike. A break below $1,940 an ounce would be significant."

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