Dovish Fed Boosts Gold Prices: Mining Activities Approved in Western Australia

Metals – Dovish comments from the Fed push gold higher

• Gold prices got a boost yesterday following dovish comments from the US Fed. While the central bank kept its policy rates unchanged at the last meeting of the current year, it recognised that the inflation pressure is easing. The Fed now projects three rate cuts in 2024 (total 75bp) compared to its September projections of two rate cuts for next year which buoyed sentiment for broader financial markets. ING’s economics team believes that the economic conditions could push the Fed to be more aggressive in rate cuts than their current projections with expectations of around 150bps cuts in 2024. Lower rates are likely to continue supporting gold.
• The Western Australia government has conditionally approved mining plans of Alcoa for its mining activities in the region. The approvals allow Alcoa to continue mining activity even if the Environment Protection Agency determines that an assessment is required. The continuation of mining activity removes some supply-side risk for aluminium.