XAUUSD - When the uptrend ends, Gold declines again

Gold price today (November 22), world gold increased sharply compared to the previous session's close, approaching the 2,000 USD/ounce mark. The US Federal Reserve (Fed) has released the minutes of its November monetary policy meeting, causing investors to buy gold when forecasting slow economic growth.

The Fed also said that economic growth slowed in other business sectors, so the Fed expects economic growth in the fourth quarter to "slow markedly" as third quarter gross domestic product increased by 4.9%. The Fed believes that risks to overall economic growth may be tilted to the downside, while risks to inflation are tilted to the upside. Current interest rate policy is restrictive and is putting downward pressure on economic activity and inflation.

However, inflation is still much higher than the target level, experts say it is likely that the Fed will maintain interest rates at the current level for a while until inflation clearly declines in a sustainable way. “The FOMC minutes were cautiously hawkish,” said BMO Capital Markets strategist.

Low sales in both the retail and housing sectors show that people are tightening their spending. The Fed also stated that economic growth will slow down in the fourth quarter of 2023, which is the reason why investors fear increased risks and boost gold purchases.

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The macroeconomic backdrop is turning supportive of gold. Specifically, falling inflation has increased the prospect of completing the Fed's interest rate hike cycle. The decline in US yields and the USD are increasing the investment appeal of gold.