The focus next week is on the U.S. Federal Reserve’s first meeting for 2023, with most traders forecasting that the central bank will hike rates by a relatively smaller 25 basis points. A slowing or potential halt in the Fed's rate hike plans is expected to benefit gold and crude prices because it means a weaker dollar and less pressure on the world's largest economy. U.S. personal consumption inflation data—the Fed’s preferred inflation gauge—is due later Friday and is expected to shed more light on the path of inflation and monetary policy.
The global investment market is showing signs of recovery, with the Dow Jones Industrial Average up 205 points and the S&P 500 and Nasdaq Composite up 1.1% and 2%, respectively. Tesla Inc. shares have jumped 10.9% due to better-than-expected earnings. Las Vegas Sands Corp. revenue was up 11%, and Chevron Corp. stock rose 4.8% after the $75 billion buyback announcement. U.S. economic growth in the fourth quarter was 2.9%, with consumer and government spending increasing.
The spot gold price has declined by 0.88% to $1929.215 on Thursday, with retail traders controlling the market. Personal Consumption Expenditures (PCE) Price Index Reading for December is expected to have retreated from the prior month but remain well above the Fed’s annual target of 2%. U.S. interest rate hikes are expected to be hiked by 25 basis points when the Fed meets next week, weighing down gold prices.
Brent crude futures gained 108 cents to $87.32 per barrel, while US West Texas Intermediate (WTI) crude futures only rose 66 cents to $81.07. Ministers from Algeria, Kuwait, Venezuela, Russia, and Oman are set to virtually meet next week as part of a panel called the Joint Ministerial Monitoring Committee (JMMC) that can call for a full meeting of OPEC+ and can also decide on crude output from the members of the panel. Markets are watching for any potential changes in output by the JMMC, especially as Russia faces U.S. and European price caps on its fuel exports.
The U.S. dollar rises 0.17% as GDP reported higher than forecasted. The U.S. economy was expected to slow in Q4, but the labour market remains solid. The Bank of Canada has "paused" rate hikes, and speculation is that the Fed will follow suit.