Gold price continues to rise above a multi-week low.
Following an increase to the $2,040 mark on Tuesday, the gold price (XAUUSD) encountered considerable supply and eventually stabilized with very minor gains. During the Asian session on Wednesday, the precious metal struggled to gain any real headway as traders sought more clarity on the Federal Reserve’s (Fed) rate drop path before placing directional bets. As a result, the market focus will shift. Keep an eye on the latest consumer inflation numbers from the United States (US), which are anticipated on Thursday and will play a vital part in deciding the commodity’s near-term trend.
The uncertainty surrounding the Fed rate drop is preventing traders from making aggressive directional bets.
Ahead of the big data risk, investors have reduced their expectations for the Fed to ease policy more aggressively. In the aftermath of a strong December US jobs report on Friday. Which indicated to a still-resilient labor market. This continues to sustain elevated US Treasury bond yields. And acts as a tailwind for the US Dollar (USD). Constraining the price of non-yielding gold. However, geopolitical dangers arising from the Israel Hamas conflict, as well as lingering concerns about a slowing economic recovery in China – the world’s second-largest economy – should provide some support. to the safe-haven precious gold.
Daily Market Movers: The gold price is struggling to find a strong direction amid contradictory fundamental cues.
The ambiguity about when the Federal Reserve will begin decreasing interest rates prevents traders from placing new directional bets on the gold market.
The New York Fed announced on Monday that US consumers’ inflation expectations fell to the lowest level in nearly three years in December, raising hopes for a change in the Fed’s policy stance soon.
Meanwhile, the healthy US economy, which is experiencing above-target inflation, provides the US central bank with more leeway to keep interest rates higher for a longer period of time.
This allows the benchmark 10-year US government bond rate to remain above the 4.0% level. Which lends The US Dollar gains support, while the yellow metal falls.
Bearish traders, on the other hand, appear hesitant and prefer to remain on the sidelines. Ahead of the latest US consumer inflation numbers. Which are set to be released on Thursday.
CNBC reported late Tuesday, citing a senior US Defense Department official. That Iran backed Houthi insurgents staged the heaviest attack on commercial merchant vessels to yet.
According to a senior People’s Bank of China official. The central bank may utilize monetary policy tools to give robust support for appropriate credit growth.
The official went on to say that the PBoC will increase its counter-cyclical. And cross cycle policy adjustments in order to foster the country’s economic growth.
There is no market-moving macro data scheduled for release from the United States on Wednesday. As a result, the XAUUSD is at the mercy of USD price movements.
