Fundamental Forecast for Gold:Neutral

Gold prices snapped a three-week losing streak with the precious metal up 0.44% to trade at 1253 ahead of the New York close on Friday. The advance comes on the heels of the FOMC policy meeting and amid continued strength risk markets with the all three major U.S. equity indices poised to close higher on the week.

The FOMC raised interest rates by 25bps as expected this week with the updated quarterly projections showing an upwardly revised print on forecasts for both GDP and employment (unemployment down to 3.9% from 4%). Interestingly enough, expectations for the Core Personal Consumption Expenditure (PCE) remained unchanged at 1.9%, just shy of the central bank’s 2% inflation target.

This suggests that while growth prospects remain firm, the central bank continues to expect subdued underlying price growth to carry over into next year. With inflation remaining the laggard of the Fed’s dual mandate of price stability and full employment, the committee will likely be in no hurry to aggressively hike rates next- a positive for the yellow metal. Heading into next week, the focus is on a break of a key range between 1240-1267 as we look for further signs of basing in gold prices.