Dot plot in gold trading
The dot plot is the FOMC chart showing where each policymaker expects the fed funds rate to be at year-end; shifts in the median dot can move gold sharply.
Also called Summary of Economic Projections, SEP dots, Fed projections
The dot plot is a chart published four times a year with the FOMC’s Summary of Economic Projections (March, June, September and December). Each dot is one policymaker’s anonymous projection of the appropriate fed funds rate at the end of the current year, the next two years and over the longer run. The median dot for each year is the headline number markets compare with their own expectations.
How it applies to gold trading
On dot-plot meetings gold has three inputs instead of two: the statement, the dots and the press conference. A median dot that implies fewer cuts than the market priced is a hawkish surprise and tends to hit gold even if the decision itself matched expectations; a lower median is dovish and supportive. Because the dots are released at 2:00 p.m. alongside the statement, the initial move on those days is often larger than on non-SEP meetings.
The dots are projections, not promises, and the Fed itself stresses that they change with the data. Their effect on gold is through the shift in expected real yields, which is why the market reaction can fade within days if subsequent data points the other way.
A common mistake
Treating the median dot as the path the Fed will follow. Historical dot plots have missed the eventual path by large margins in both directions.
See also: FOMC, Fed funds rate, Hawkish and dovish, Real yields.
Frequently asked questions
When is the dot plot released?
With the Summary of Economic Projections at the March, June, September and December FOMC meetings, at 2:00 p.m. Eastern alongside the statement.
Why does the dot plot move gold more than the rate decision?
The decision is usually priced in days ahead. The dots reveal the committee’s expected path, which is harder to predict and directly affects expected real yields.