World gold price may increase by 500 USD

Concerns about the independence of the Federal Reserve continue to be a factor that has kept gold prices at record highs, and according to some experts, legal developments around the position of Fed Governor Lisa Cook could create significant fluctuations in the market.

The US House of Representatives has announced that it will hold a hearing on January 21 to consider the president's authority to dismiss a member of the Fed Board of Governors. This issue arose from a legal dispute over Lisa Cook's position. Cook has not yet been prosecuted for civil or criminal liability in connection with the allegations.

In the context of the FED operating a cautious monetary policy, analysts believe that any change related to the central bank's leadership apparatus could impact market expectations about interest rates.

In a report released on Wednesday, Ms. Rhona O'Connell - Director of Market Analysis at StoneX, said that the gold market will closely monitor this legal process:

If the results raise concerns about the Feds independence, gold prices could receive an increase of around $500. Conversely, if the stability of this agency is consolidated, the upward pressure on prices may decrease" - she said.

She also noted that the US dollar's movements will be an important complementary factor.

Although the hearing will take place in January, observers predict the court will need time before making a final ruling, so Ms. Cook is likely to continue to serve her current role in the coming time.

The Fed started its easing cycle by cutting interest rates by 25 basis points at the beginning of the month, but maintained a cautious stance due to persistent inflationary pressures. Fed Chairman Jerome Powell said the decision at the December meeting still depends on economic data.

Many analysts predict that the slowing private labor market could prompt the Fed to consider cutting interest rates sooner. According to the CME FedWatch tool, the market is pricing in about 65% of the possibility of the Fed continuing to cut interest rates at the next meeting.

In addition, Chairman Powell's term as Fed Chairman will end in May next year, and the issue of selecting a successor is also of interest to the market, as any changes in senior personnel can affect policy orientation.