Gold may consolidate until FOMC meeting if econ. data is inline

The Fed meets in 14 days, and futures markets are currently predicting about a 25% chance of an interest rate hike. That would be bearish for gold. Gold will likely consolidate and perhaps even move a bit lower leading up to the meeting as investors start to price in the rate hike possibility. If the Fed leaves rates alone, then gold will move higher.

One thing that might move gold earlier is tomorrow's slate of economic data, including a JOLTS jobs report and homebuilding numbers. A positive surprise might increase the likelihood of a rate hike and move gold lower, while a negative surprise might increase the likelihood that rates will stay the same, moving gold higher.

Comment:

I said 25% in my last post; I meant 15%. Today we got modestly positive economic data, but not so good as to move the needle. The odds of a rate cut only rose about 1.5%, and the market took that as a good sign for both gold and oil, both of which ticked slightly higher.

Comment:

With the odds of a rate hike falling and now down to 12.7%, gold is moving higher and might even break out ahead of the Fed meeting. Assuming the odds stay that low, it would be worth buying any dip in gold late this week or early next week.