Lorie Logan, president of the Federal Reserve Bank of Dallas, said on Monday she expects to see more rate reductions ahead of November’s Fed policy meeting.
Logan stated in the speech he will deliver at the Securities Industry and Financial Markets Association’s annual meeting, in New York: “If the economic evolution is as I expect it to be, then a gradual lowering of the policy rate towards a normal or neutral level could help us manage risks and reach our goals.”
Prices of gold and silver continue to rise on the back of optimism about US interest rates being cut.
Gold on COMEX is currently trading at $2.736.05 an ounce. This represents a 0.2% increase from its previous closing price.
Contracts had reached a new record of $2.755.30 an ounce.
Silver’s December COMEX contract was $33.875 an ounce. This is a 2% increase. This contract is close to a 12-year-high.
US Economy “Strong and Stable”
Logan stated that the US economy was “strong and stabile”, however, “significant uncertainties” remain regarding the future of the labor market.
Logan said:
Fed will need to be flexible and ready to make adjustments if necessary.
Logan’s remarks come amid expectations that the Fed would cut interest rates 25 basis points during its November meeting.
Markets were surprised to learn that the US central bank cut interest rates in September by 50 basis points.
Market traders had expected another rate cut of 50 basis points at the start of October. However, hotter inflation rates in the US as well as a strong labour market has caused them to lower their expectations.
China cuts loan rates
China has announced a reduction in its prime lending rates for both one-year loans and those with a five-year term that is slightly larger than expected.
Kitco News says:
Despite the market’s expectations, Chinese authorities still haven’t met them when it comes fiscal stimuli.
Kitco News quoted broker SP Angel as saying: “Investors are disappointed after last month’s assurances of money being forthcoming to shore up China’s struggling property market.”
The economy of China is crucial for the metals market as it is the largest consumer of base and precious metals.
Bullion: a technical outlook
Gold prices are expected to rise more in future, according to experts. This is because any rate cut by the US will likely boost sentiment on the gold market.
Reduced interest rates reduce borrowing costs for consumers and increase liquidity within the economy.
It makes more investment in commodities easier.
Kitco.com predicts that gold prices will build up strong resistance to $2,800 an ounce.
Kitco reported that the first resistance was seen at 2,775.00, and then again at 2,800.00.
Support comes in at $2.708 per ounce.
Kitco stated that silver has an overall technical advantage near term.
Jim Wyckoff said, in a Kitco report, that he is an analyst.
The next price target for silver bulls is to close above the solid technical resistance of $37.50.
Silver contracts are facing resistance at $35.50 per ounce and $34.75 thereafter. Silver is supported at $33.225 an ounce.
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