GOLD PRICE WALKS ON TIGHT ROPE AS HOT INFLATION DENTS FED RATE CUT BETS FOR JUNE
- Gold price attempts for a firm footing, although the near-term outlook remains uncertain.
- Stubborn US inflation for February has increased the uncertainty over Fed rate cuts in June.
- Investors will shift focus to the US PPI and Retail Sales data for February.
Gold price (XAU/USD) trades slightly in the green in Wednesday’s European session but has an uncertain outlook in the near term as investors have scaled down expectations of Federal Reserve (Fed) rate cuts in June. The precious metal recorded its second-largest single-day decline in a month on Tuesday after the United States Consumer Price Index (CPI) data for February turned out surprisingly hotter than expected.
The annual headline and core CPI grew at a higher pace than what market participants had anticipated due to higher gasoline and shelter prices. The opportunity cost of holding an investment in non-yielding assets, such as Gold, rose as stubborn price pressures have negatively influenced market expectations for the Fed cutting interest rates in June’s policy meeting. An increase in expectations of the Fed delaying rate cuts beyond June could weigh heavily on the Gold price.
The 10-year US Treasury yields, which are positively influenced by the Fed’s hawkish policy stance, jumped to 4.16% as the last leg of high inflation turns out to be a hard nut to crack. Meanwhile, the US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, is slightly up near 103.00.
- Gold price attempts for a firm footing, although the near-term outlook remains uncertain.
- Stubborn US inflation for February has increased the uncertainty over Fed rate cuts in June.
- Investors will shift focus to the US PPI and Retail Sales data for February.
Gold price (XAU/USD) trades slightly in the green in Wednesday’s European session but has an uncertain outlook in the near term as investors have scaled down expectations of Federal Reserve (Fed) rate cuts in June. The precious metal recorded its second-largest single-day decline in a month on Tuesday after the United States Consumer Price Index (CPI) data for February turned out surprisingly hotter than expected.
The annual headline and core CPI grew at a higher pace than what market participants had anticipated due to higher gasoline and shelter prices. The opportunity cost of holding an investment in non-yielding assets, such as Gold, rose as stubborn price pressures have negatively influenced market expectations for the Fed cutting interest rates in June’s policy meeting. An increase in expectations of the Fed delaying rate cuts beyond June could weigh heavily on the Gold price.
The 10-year US Treasury yields, which are positively influenced by the Fed’s hawkish policy stance, jumped to 4.16% as the last leg of high inflation turns out to be a hard nut to crack. Meanwhile, the US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, is slightly up near 103.00.
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