The Federal Open Market Committee (FOMC) meeting, which will be held tomorrow morning, is a major focus for global financial markets. Investors are awaiting new guidance from the US central bank regarding the direction of interest rates and future economic conditions. Although there is little likelihood of a change in interest rates in the near future, the tone of the Fed's discussions will significantly influence market direction.

The FOMC's primary focus will be assessing persistent inflation and the slowing US labor market. The Fed will also evaluate whether current monetary policy is tight enough or whether adjustments are needed. The meeting minutes will provide insight into the extent of central bank officials' concerns about the economic slowdown and global risks.

Impact on the US Dollar

If the FOMC minutes indicate a more cautious stance and leave open the possibility of future interest rate cuts, the US dollar could weaken. However, if the Fed confirms it will maintain a tight policy for longer, the dollar could strengthen again, as US yields remain attractive to global investors.

Impact on Gold Prices

Gold is highly sensitive to the Fed's signals. A dovish tone or the possibility of an interest rate cut will support gold prices, as the opportunity cost of holding gold will be lower. Conversely, if the Fed sounds more hawkish, gold risks being held back or corrected.

Impact on the Global Economy

The Fed's policy direction also impacts the global economy. A looser stance can provide a breather for developing countries, reduce exchange rate pressures, and encourage capital flows. However, prolonged tight policy risks depressing global growth, especially for countries with large dollar debts. (Cay)

Source: Newsmaker.id