Gold (XAU/USD) Dips to $2,770 Amid Fed Rate Speculation and Dollar Strength; XAU to target $2,185?

Gold’s (XAU/USD) price slightly retreated to $2,770 in Asian markets on Tuesday, as investors braced for key U.S. inflation indicators and Federal Reserve insights, with the strengthening dollar, now at a one-month high of 93.50 on the Dollar Index, applying additional pressure.

Inflation and Fed Outlook Affect Gold

The gold market’s anticipation centers around the PCE price index, expected to reveal a 0.4% increase month-over-month, setting the stage for the Federal Reserve’s interest rate path. Sticky inflation figures might delay the Fed’s anticipated 75 basis-point rate cut in 2024, affecting gold’s appeal.

Furthermore, remarks from Fed Chair Jerome Powell and FOMC member Mary Daly later this week are highly anticipated for their potential influence on market trends.

Copper’s Decline Amid China’s Economic Woes

Copper prices descended from their 11-month zenith, with three-month futures on the London Metal Exchange dropping 0.3% to $8,839 a ton and one-month U.S. futures decreasing by 0.4% to $3.9947 a pound.

The retraction follows a peak spurred by central bank dovishness, which shifted investor focus to the dollar. Despite Chinese refiners’ intentions to cut production, recently reported stockpiles in China remain high, diluting the impact on global supply constraints.

China’s Outlook Dampens Metal Sentiment

The broader sentiment towards China’s economy has deteriorated, with investors showing impatience for stimulus measures from Beijing amidst stagnant economic indicators. Although Chinese copper refiners have signaled production cuts aiming to tighten global supplies, the lack of tangible economic improvement in China continues to cast a shadow over copper and potentially other metal markets.

This updated forecast for Gold (XAU/USD) and the broader metals market offers a snapshot of the current economic landscape, where specific numbers and upcoming economic events play crucial roles in shaping investor sentiment and market directions.

Gold Price Forecast

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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