Gold Notches Unlikely Win as Fed Again Ratchets Up Rates

By Barani Krishnan - Gold bulls feared the worst as the Federal Reserve headed for its much-anticipated third straight 75-basis point rate hike of the year.

Yet, it was all’s well that ended well for longs in the game who actually managed to see their first price gain in three sessions despite the central bank threatening more substantial rate hikes before the year is done.

The benchmark gold futures contract on New York’s Comex, December, settled up $4.60, or 0.3%, at $1,675.70 per ounce. The session high for the day was $1,696.65 — virtually hitting the $1,700 mark that gold bulls have aspired to return to since falling off that price point on Sept. 15.

The spot price of bullion, which is more closely followed than futures by some traders, was up $9.03, or 0.5%, at $1,673.84 by 16:35 Eastern U.S. Time (20:35 Greenwich Mean Time). Spot gold’s peak for the day was $1,688.06.

“The hawkish Fed projections are a rather grim outlook for the economy and that could eventually trigger a resumption of a safe-haven role for gold,” said Ed Moya, analyst at online trading platform OANDA. “The Fed acknowledged that we’re at the very lowest levels of what is restrictive and that they are prepared to soften this labor market. This inflation fight is going to get ugly for the economy, but right now it seems the Fed will be done hiking in February.”

“Gold will remain vulnerable to selling pressure if inflation does not continue to ease, but it could start to stabilize now.”

Sunil Kumar Dixit, technical chartist for gold at, said gold could build towards $1,740 if it maintained its current momentum.

"Oversold conditions make gold vulnerable to fierce short covering if critical resistance zones are breached," said Dixit in an outlook on gold published on Wednesday. "A sustained break above this zone puts the 50-Day Exponential Moving Average of $1,726 and the previous week's high of $1735 as a challenge."

U.S rate hikes have some ways to go before the Fed considers a pause or reduction, with the likelihood of another 125 basis points being added before the end of this year, Chairman Jerome Powell said Wednesday.

Powell's comments came after the FOMC announced a third straight 75-basis point rate hike since June. It was the fifth hike for the year that brought key lending rates to a peak of 3.25% from a mere 0.25% in February.

And the Fed isn’t alone with tightening though: Central banks in the United Kingdom to Switzerland are contemplating higher rates too this week. ​

An additional 1.25% in increases would bring U.S. rates to a peak of 4.5%. Asked if this would be “restrictive enough” for the Fed’s aim to discourage inflation, the central bank chief replied: “We'll be looking at a few things. First, we'll want to see growth continuing to run below trend, to see movements in the labor market showing a return to a better balance between supply and demand, and clear evidence that inflation is moving back down to 2%.”

To a related question, Powell said, “clearly, today we're just moved into the very lowest level of what might be restrictive.”

He warned of job losses and cuts in wage gains as the Fed embarked on fighting inflation, which was its main game.

“We can't fail to do that,” he said, referring to the central bank’s mission against price growth. “That would be the thing that would be most painful for the people that we serve. We have got to get inflation behind us. I wish there were a painless way to do that. There isn't. What we need to do is get rates up to the point where we're putting meaningful downward pressure on inflation. That's what we're doing. We haven't given up the idea that we can have a relatively modest increase in unemployment.”

As for the US economy itself, the Fed projected a Gross Domestic Product growth of 0.2% for all of this year and 1.2% for 2023. That would compare with the 2021 GDP growth of 5.7% as the United States recovered robustly from the business lockdowns associated with the pandemic from a year ago.

Economists have warned that the Fed could end up pushing the United States into a deep recession with its sharpest rate hikes in four decades, saying the high-flying housing sector and one-time ebullient stock market could end up as the Fed’s victims.

Powell acknowledged those concerns on Wednesday, saying he could not guarantee the U.S. economy will remain recession-free. Here’s where gold could see a prop as a safe-haven, as OANDA’s Moya suggests.

“We have always understood that restoring price stability while achieving a relatively modest increase in unemployment and a soft landing would be very challenging,” Powell said. “No one knows whether this process will lead to a recession or if so, how significant that recession would be.”

Preliminary estimates show that GDP likely contracted by 0.6% in the second quarter after a 1.6% slowdown in the first quarter. Two straight quarters of GDP growth typically places an economy in a recession.

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network
  • London Office
    One Financial Markets 

    1 Finsbury Market
    EC2A 2BN
    United Kingdom

    T:  + 44 ( 0 ) 203 857 2000
  • Dubai Office
    One Financial Markets 
    OT19-39 Central Park Tower
    Dubai International Finance Centre
    United Arab Emirates
    T: + 00 971 44 22 888

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: