FX.co ★ FOMC meeting to decide the fate of gold

The Federal Reserve is set to meet on Wednesday to discuss future actions on monetary policy. The decisions will inevitably affect the gold market, more specifically on whether price will continue to fall, or finally rise.

But the tension between fears of higher inflation and slower growth in the second half of the year makes the Fed's job particularly difficult. This time, the central bank should consider the real yield on 10-year Treasury bonds, which has recently reached records.

In addition, rising government debt and ongoing quantitative easing by the Fed are fueling fears that the government is devaluing the US dollar. Many investors, including billionaire Stanley Druckenmiller, recently expressed concerns that dollar could lose its status as a global reserve currency.

But Stephen Moore, senior economist at FreedomWorks, rejected this theory and said there is no traditional currency that could challenge dollar in the near future.

Regarding digital assets, Moore expects a tougher government regulation and oversight on cryptocurrencies such as Bitcoin, but anticipates a digital currency from the Fed.

As for gold, the precious metal is likely to receive support from the Fed as inflation and prices continue to rise until 2023.