The Federal Reserve’s latest Beige Book report shows that, in terms of overall economic activity, ten of the twelve Fed districts recorded slight to moderate growth, one district experienced a slight decline, and one district remained unchanged. Consumer spending varied across districts, and the gap in spending between income groups widened under affordability pressures. High-income households maintained strong purchasing power and were less sensitive to price increases; middle-income households were more frugal, trying to make the most of every penny; and low-income consumers faced greater financial pressure. Overall, credit card usage increased, retail store traffic decreased, but demand for necessities strengthened. Auto dealers reported declining new car demand due to affordability and fuel costs, while consumers turned to used cars and hybrid vehicles. In contrast, manufacturing activity grew at a moderate to strong pace in nine districts, with only one district experiencing a slight decline. Banking conditions remained stable in most districts; however, several districts saw increases in mortgage, consumer, and agricultural loan delinquency rates.

With the Federal Reserve officials holding this “Beige Book” report at their monetary policy meeting two weeks later, it’s unlikely they will decide to cut interest rate. The fear that not cutting rates is tantamount to a rate hike should dampen risk appetite for gold, putting downward pressure on prices.

A short position can be established around $4,484, with a short-term target of $4,379 for profit-taking and a stop-loss at $4,504.

Gold Price 1-Hour Chart:

Ferris Kwok

Chief Analyst
Success Finance Group

Email: ferris.kwok@successfn.com