Fed Chair Jerome Powell stated the US likely for further rates hike at any time if the inflation remains higher than expected. He mentioned that the Federal Reserve is preparing the first ever rates hike after the pandemic, which impacted to the whole economy in the last 2 years.

Powell said in the senate hearing, which hosted to continue his mandate until 2024 by President Joe Biden, “the economy no longer needs the comfort policy”. Fed chair stated FOMC member likely to be hawkish even if the schedules have not been confirmed, which means that the rates will likely to be hiked 3 times this year. However, according to the Fitch Ratings, the interest rates was forecast to be increase 2 times this year and 4 times next year, while Powell rejected the declaration of the number of increased over the expectation of the Federal Reserve.

Federal Reserve has not decided about the schedule of the increase. We need to be “humble and nimble”, which referring to the unsteady labor market gains despite reaching the Fed’s target for “maximum employment”, with a jobless rate of 3.9% in December. “If inflation continues to be higher than forecast, we will have to raise interest rates more over time.”

However, while the pressure of the inflation is expected to continue until mid-year, we might likely to remain in the periodical of the lowest interest rate, Powell added. The economic plunge 3.5% in 2020 due to the locked down and the effect of the pandemic. The Federal Reserve forecasted the growth of 5.5% in 2021 and 4% in 2022. The issue of the Fed is on the inflation, which is remain running at the four-decade highs in which the price of the everything has been increased from low due to the demand of the high wages and the disruption in supply chain.

The economist expected the interest rates is likely to increase in March and June, while the Fed moving the direction to lower the pressure of the inflation. Fundamentally, its is worst for the gold price which closed the previous year in 2021 downed by 3.6%, which also the first year dropped in 3 year and the most dropped since 2015. However, the economists thought if the inflation still remain high in 2022, gold price might pump and setting the break the record high of 2020 at $2,100, which eventually due to the increase of the inflation. Further, technically, the major resistance is at $1,830, which gold failed to test several times in previous months.

The fundamental news to follow tonight at 8:30pm will be the CPI, which impact to the increase of inflation and the decision of the Federal Reserve for the first-rate hike for this year.

Based on fundamental and technical analysis, gold price still remains bullish even if the CPI might be good, which it might down to 1,818.80 to 1819.50, then it will bounce back. The market recommendation is taking long position after the CPI released at 1,815 to 1,819, setting take profit at 1,825 to 1,835 and risk management at 1,805.

Analyzed by: Mr.Long Samnang, Independent Analyst