Gold Price at $2,314 as Market Awaits Fed Meeting and CPI Data Insights
Gold prices remained steady around the $2,300 support level in Asian trade on Wednesday as traders awaited crucial signals from the Federal
Gold prices remained steady around the $2,300 support level in Asian trade on Wednesday as traders awaited crucial signals from the Federal Reserve meeting and upcoming U.S. inflation data.
XAU/USD prices have recently declined sharply due to diminishing expectations of U.S. rate cuts amid persistent inflation and a robust labour market. This scenario has pushed the dollar to one-month highs, pressuring metal prices, while Treasury yields have also risen.
Fed Meeting and CPI Data Impact
Spot gold prices have found support around $2,300 per ounce, as hopes of eventual Fed rate cuts helped limit losses. The Federal Reserve is expected to keep rates unchanged at its two-day meeting,, which concludes later on Wednesday.
However, any indications on future rate decisions will be critical, especially amidst speculation about a potential rate cut in September. Additionally, the release of consumer price index (CPI) data, expected to show inflation remained sticky in May, could influence the Fed’s stance.
US core CPI inflation expected to ease slightly ahead of Fed decision
The Bureau of Labor Statistics (BLS) will publish the highly anticipated Consumer Price Index (CPI) inflation data from the United States (US) for May on Wednesday at 12:30. pic.twitter.com/mJDZBhPWuG
— Hazel Zoe (@ZoeHazel82969) June 12, 2024
Inflation and Rate Speculation
High inflation rates typically diminish the appeal of precious metals, given the increased opportunity cost of holding non-yielding assets.
Investors have been scaling back bets on a September rate cut due to a strong U.S. labor market and persistent inflation, which supports the U.S. dollar near a one-month peak. This scenario poses a headwind for gold prices.
The CPI data is projected to show a monthly increase of 0.1%, down from 0.3% previously, with a yearly rate steady at 3.4%, well above the Fed’s 2% target.
🏮CPI DATA ANTICIPATION🏮
The core CPI is predicted to increase by 0.3% in May, while the headline CPI will rise by 0.1%. The core CPI is expected to be 3.8%, and the headline CPI is projected to decrease to 2.9% year over year.
The US Consumer Price Index (CPI) data for May… pic.twitter.com/aUPHLLyU0v
— Crypto Aman (@cryptoamanclub) June 12, 2024
Political and Geopolitical Factors
Renewed political uncertainty in Europe and ongoing geopolitical tensions provide some support for gold, cautioning bearish traders. Market expectations currently indicate that the Fed might cut rates by only 25 basis points this year, either in November or December, reinforcing the U.S. dollar’s strength.
The U.S. Dollar Index (DXY) stands near its highest level since May 9, capping gains for gold. Traders are awaiting further cues on the timing of rate cuts from the Fed’s upcoming economic projections and the “dot plot”.
In summary, the gold price forecast hinges on upcoming U.S. inflation data and the Federal Reserve’s rate decisions, with the potential for significant impacts on XAU/USD prices.
Gold Price Forecast: Technical Outlook
Gold is currently trading at $2,314.085, down 0.15%. The pivot point at $2,325.10 is crucial for determining future price movements.
Immediate resistance levels are at $2,336.79, $2,348.12, and $2,365.66. On the downside, immediate support is found at $2,287.82, followed by $2,271.74 and $2,254.20.Technical indicators suggest a mixed outlook. The Relative Strength Index (RSI) stands at 45, indicating a neutral momentum.
The 50-day Exponential Moving Average (EMA) is at $2,330.62, with the price trading below it, reinforcing a bearish trend.
In conclusion, the outlook for gold remains bearish below $2,325. A break above this level could shift the bias to bullish. Conversely, staying below this pivot supports a continuation of the current downtrend.
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