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Published Sep 20, 2023 09:00AM ET

Fed’s Rate Decision Impacts Gold, Silver, and Canadian Dollar Ahead of Policy Meeting

The financial market’s attention is firmly on the upcoming Federal Reserve’s policy meeting, with its potential implications for gold prices, silver, and the Canadian dollar. As per the CME’s FedWatch Tool, the prevailing consensus anticipates that the Fed will maintain the current interest rates, with a one-in-three chance of another rate hike before 2024 ends.

This week, real Treasury yields have remained at higher levels, reflecting the market’s collective prediction of a hawkish yet non-active approach from the Fed. This has led to a restrained outlook on gold. According to NAB Commodities Research, gold prices might face a downward push if the Federal Reserve adopts a tougher stance. The ongoing scenario suggests a potential consolidation for prices within the $1,900 to $1,890 range.

Similarly, the silver market is also focused on the Federal Reserve meeting. The broader financial sector expects unchanged rates post this meeting, yet there is a 35% probability of another rate increment before 2024 concludes. The key element in this unfolding scenario will be insights from Fed Chair Jerome Powell’s press conference.

The Canadian dollar saw a surge this Wednesday due to hotter-than-predicted inflation figures, reaching its strongest position since August 10th. Despite this boost, speculators have heightened their pessimistic outlook on the Canadian dollar as per U.S. Commodity Futures Trading Commission data. The likelihood of the Bank of Canada introducing a rate hike in October has almost doubled following the inflation report.

In addition to interest rates, the Federal Reserve’s quarterly economic outlook is likely to provide insights into GDP, unemployment, and inflation trends. Despite concerns over rate hikes potentially leading to an economic slowdown, Fed officials have not completely ruled out additional hikes.

With Wall Street in a holding pattern ahead of the Federal Reserve’s policy reveal, the prevailing market sentiment is cautiously optimistic. The market’s resilience is underpinned by strong earnings, which currently appear to be overshadowing other narratives, including inflation concerns.

In the commodities market, West Texas Intermediate are down $0.68 or 0.72% at $90.52 a barrel. are down $1.30 or 0.07% at $1,952.40 an ounce, while are gaining $0.094 or 0.4% at $23.550 an ounce.

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