The decline of gold prices last week was like a couple of high-quality blows. The first blow came on Wednesday when the Fed ended the FOMC's September meeting, which saw more aggressive behavior. They outlined the possibility of a rate increase in 2022, which was not in the last forecast.
As expected, the Fed has neither announced the start date of the reduction, nor how fast they will reduce their monthly asset purchases. However, many analysts already predicted that there would be no specific announcement about the timing and the start date of the reduction, which may happen even before next year.
The impact of the FOMC meeting on US stocks was the polar opposite it had on gold, which is a safe haven. In the case of US stocks, strong retail sales reported earlier this month played a positive role. The economists' forecasts for consumer spending predicted a decline of 0.8%, while another survey showed that the decline will be 1.8%. At the same time, analysts underestimated consumer demand. It is worth noting that consumers increased their retail spending by +0.8.
A high indicator of consumer spending could become a catalyst for a sharp rise in US stocks: the Dow Jones industrial index rose by 500 points during the day and closed that day at 34,764.82, which means an increase of 1.48%.
The NASDAQ composite index rose by 1.04%:
S&P 500 gained 1.21% and closed at 4448.98 on the same day:
Meanwhile, stock traders did not seem to be confused by a more aggressive monetary policy in the future, which cannot be said about either the US dollar or gold.
The dollar index declined by 0.38% and closed that day at 93.105:
Silver also experienced a drawdown, losing 1.69% on the day:
In the case of gold and silver, it seemed that market participants ignored the upcoming vote on raising the debt ceiling on Monday. If they fail to reach a bipartisan agreement, the consequences will be such that the government will be forced to close some important services, thus creating problems for the United States to service its debt payments.
The Fed left interest rates unchanged and shifted the timing of their increase. The Federal Reserve's inflation forecasts now suggest the possibility of a more stable level of inflation.
