GOLD Approaches All-Time Highs on Fed’s Dovish Stance
The Gold prices are hit all time high price of $2200 after the FED replied Dovish monetary policy settings yesterday. FED Powell words makes US Dollar weaker against Gold. He told we do not change our policy from two months data collections. Inflation is higher, Labor market is robust, Unemployment rate is lower, Benefits of Jobless claims is lower. FED Projections for 2024 GDP data is 2.1% from 1.4% projected in December month. Inflation reading stood at 4.6% for 2024. Overall FED Powell words and monetary policy outcome is not helpful for US Dollar strength in the market.
XAUUSD has broken box pattern in upside
Gold prices experienced a significant surge during the latter part of the North American trading session subsequent to the Federal Reserve’s decision to maintain interest rates at their current level. However, the Federal Funds Rates (FFR) projections for 2025 were revised upwards, prompting a bullish reaction in the gold market. At the time of reporting, the XAU/USD currency pair exhibited notable volatility, fluctuating within the range of $2170 to $2180, with gains exceeding 1%.
The Federal Reserve opted to keep the benchmark rates unchanged within the range of 5.25% to 5.50%, a stance that has been consistent since May 2023. Additionally, the central bank continued with its pace of balance sheet reduction. In the Fed’s official statement, emphasis was placed on the resilience of the US economy and the strength observed in the labor market. While acknowledging advancements in curbing inflation, officials also underscored the ongoing challenges, signaling that the task remains unfinished. They further emphasized the evolving balance of risks associated with achieving their dual mandate and reiterated their commitment to data-driven decision-making processes.
Federal Reserve Chair Jerome Powell echoed previous sentiments shared by himself and fellow policymakers, emphasizing the necessity for additional evidence before considering any adjustments to interest rates. Addressing inquiries regarding the Fed’s tolerance for heightened inflation, Powell acknowledged expectations for a potentially tumultuous journey in achieving the central bank’s 2% inflation target. He noted that despite unexpectedly high inflation figures earlier in the year, the broader narrative suggests a deceleration in price increases.
In terms of recent economic indicators, mixed signals were observed in business activity, rendering projections of the US economic deceleration challenging. While there were signs of cooling in the labor market, the economy witnessed a greater-than-expected addition to the workforce, coupled with a decline in new unemployment benefit applications. Notably, recent inflation data surpassed expectations both on the consumer and producer fronts, indicating a stickier inflationary trend than previously anticipated.
Given the prevailing economic landscape, the remarks made by Fed Chair Jerome Powell during his testimony before the US Congress earlier in the month, hinting at potential rate cuts, appeared warranted. However, recent inflation figures and retail sales data prompted a reassessment of market expectations regarding future Fed rate cuts. This realignment in expectations aligns with the Federal Reserve’s projected trajectory of a 75 basis point easing by the end of 2024.
According to the CME FedWatch Tool, the probability of a rate cut in June currently stands at 64%, down from 72% reported a week prior, reflecting the evolving sentiment among market participants regarding the future monetary policy stance of the Federal Reserve.
GOLD Hits Record High as Fed Maintains 2024 Rate-Cut Outlook
The Gold prices are hit all time high price of $2200 after the FED replied Dovish monetary policy settings yesterday. FED Powell words makes US Dollar weaker against Gold. He told we do not change our policy from two months data collections. Inflation is higher, Labor market is robust, Unemployment rate is lower, Benefits of Jobless claims is lower. FED Projections for 2024 GDP data is 2.1% from 1.4% projected in December month. Inflation reading stood at 4.6% for 2024. Overall FED Powell words and monetary policy outcome is not helpful for US Dollar strength in the market.
XAUUSD has broken Descending Triangle in upside
Gold Surges to Record High as Fed Affirms 2024 Rate-Cut Outlook
Gold prices soared to unprecedented levels on Thursday, propelled by a decline in the US dollar and bond yields following the Federal Reserve’s commitment to its projection of three rate cuts for the year.
Lower interest rates diminish the opportunity cost of holding non-yielding bullion, exerting downward pressure on the dollar and rendering gold more affordable for investors using other currencies.
Spot gold surged by 0.8% to reach $2,203.84 per ounce, as of 0153 GMT, after peaking at an all-time high of $2,222.39 earlier in the trading session. Meanwhile, US gold futures experienced a 2.1% increase, reaching $2,206.30.
Despite maintaining steady interest rates on Wednesday, Fed policymakers signaled their intention to reduce rates by three quarters of a percentage point by the close of 2024.
Fed Chair Jerome Powell remarked that recent spikes in inflation rates hadn’t altered the fundamental narrative of gradually easing price pressures in the United States.
Kyle Rodda, a financial market analyst at Capital.com, described the current market conditions as a “goldilocks scenario,” where slightly elevated inflation expectations intersect with lower nominal rates to yield diminished real yields.
Rodda added, “There was a period of subdued sentiment in the market, marked by a notable decline in net long positions. However, the dovish stance of the Fed, coupled with a modest squeeze on existing short positions and a surge in momentum chasing, has bolstered bullish sentiment.”
According to the CME Group’s FedWatch Tool, Fed funds futures traders are now pricing in a 75% likelihood of the Fed commencing rate cuts in June, up from 59% on Tuesday.
The US dollar slid to a one-week low against its counterparts, while benchmark US 10-year Treasury yields also experienced a decline.
Tim Waterer, chief market analyst at KCM Trade, remarked, “With Powell maintaining the possibility of three rate cuts this year, the dip in bond yields and the US dollar paved the way for an upward trajectory in gold prices.”
GOLD Surges to Record High as Fed Maintains 2024 Rate-Cut Plan
The Gold prices are hit all time high price of $2200 after the FED replied Dovish monetary policy settings yesterday. FED Powell words makes US Dollar weaker against Gold. He told we do not change our policy from two months data collections. Inflation is higher, Labor market is robust, Unemployment rate is lower, Benefits of Jobless claims is lower. FED Projections for 2024 GDP data is 2.1% from 1.4% projected in December month. Inflation reading stood at 4.6% for 2024. Overall FED Powell words and monetary policy outcome is not helpful for US Dollar strength in the market.
XAUUSD is moving in Ascending channel and market has reached higher high area of the channel
Gold prices surged to a historic peak on Thursday as the Federal Reserve maintained its forecast of three rate cuts for the year, causing the U.S. dollar and bond yields to decline.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion, exerting downward pressure on the dollar and making gold more affordable for investors using other currencies.
Spot gold rose by 0.8% to $2,203.84 per ounce, reaching an all-time high of $2,222.39 earlier in the session. U.S. gold futures also climbed by 2.1% to $2,206.30.
While the Fed held interest rates steady on Wednesday, policymakers indicated their expectation of reducing rates by three-quarters of a percentage point by the end of 2024.
Fed Chair Jerome Powell emphasized that recent high inflation rate readings did not alter the underlying narrative of gradually easing price pressures in the United States.
Kyle Rodda, a financial market analyst at Capital.com, described the current situation as a “goldilocks scenario,” where slightly higher inflation expectations intersect with lower nominal rates to yield decreased real yields.
Fed funds futures traders are now pricing in a 75% probability of the Fed commencing rate cuts in June, up from 59% on Tuesday, according to the CME Group’s FedWatch Tool.
The U.S. dollar weakened to a one-week low against its rivals, while benchmark U.S. 10-year Treasury yields also dipped.
Tim Waterer, chief market analyst at KCM Trade, noted that Powell’s stance on maintaining the possibility of three rate cuts this year led to the decline in bond yields and the U.S. dollar, thus propelling gold prices higher.
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