Gold Price to Shine as FOMC Curbs Longer-Run Interest Rate Forecast

London (Sept 30)  Gold prices may exhibit a more bullish behavior over the remainder of the year as Federal Reserve officials adopt a less-hawkish tone and project a more shallow path for the benchmark interest rate.

Even though the Federal Open Market Committee (FOMC) appears to be on course to deliver three rate-hikes in 2017, Chair Janet Yellen and Co. now forecast a terminal interest rate well below 3.00% as ‘overall inflation and the measure excluding food and energy prices have declined this year and are running below 2 percent.’ The downward revision in the longer-run interest rate forecast suggests the FOMC is inclined to halt the hiking-cycle ahead of schedule, with bullion at risk of exhibiting a more bullish behavior especially as it breaks out of the downward trend from 2012.

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