Top Stories This Week: Gold Price Breaks US$1,800, Market Eyes Fed's Next Move

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This week started off slow for gold, but the yellow metal picked up pace mid-week, rising to just above US$1,800 per ounce by Thursday (December 1). It closed out the five day period around that level.

Diverse factors continue to impact the gold price, but chief among them right now are recent comments from US Federal Reserve Chair Jerome Powell. During a closely watched Brookings Institution speech on Wednesday (November 30), he said that smaller interest rate hikes are coming and could start as early as this month.

"(I)t makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting" — Jerome Powell, US Federal Reserve

According to Powell, the Fed recognizes that its actions take time to be reflected in the market, and raising rates at a slower pace will allow it to take stock of its progress in taming high prices. Experts often use the consumer price index to judge inflation, but details for November won't be released until mid-December.

For now, market watchers are eyeing this week's personal consumption expenditures (PCE) price index data — when food and energy are excluded, it shows a lower-than-anticipated 0.2 percent month-on-month increase in October.

The PCE price index measures what people living in the US pay for a broad range of goods and services, and Powell has emphasized its accuracy as a gauge of where inflation is headed.

The Fed has hiked rates six times so far this year, with the last four boosts being 75 basis points each. The central bank's next meeting runs from December 13 to 14.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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