It is Federal Reserve (Fed) decision day, and the precious metals markets are widely expecting the US central bank to keep rates unchanged, TDS analysts note. The recent US Consumer Price Index (CPI) data, which came in softer than expected, could lead Fed Chairman Jerome Powell to sound more optimistic in his remarks later on Wednesday, a scenario that would be positive for Gold, they say.
“We expect Powell to sound optimistic given the recent data, and anticipate the dots will show only two cuts in 2024 rather than the previous three. For the precious metals market, this outcome is baked into the cake, particularly as Fed pricing remains tighter than the Fed guidance itself.”
“Given the outlook will remain extremely data dependent, it is likely that Gold (XAU/USD) investors continue to watch for a weakening trend in data before the macro cohort steps back into the market. In this sense, the latest CPI data coming in below expectations has given the yellow metal a boost.”
“Looking forward, Gold could see some marginal CTA buying above $2,333/oz, and remains well insulated from selling with the closest notable trigger being around the $2,203/oz mark.”
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