Gold xtended its overnight rejection drop from the 50-day SMA barrier.

Gold price (XAUUSD) meets with fresh supply during the early European session on Thursday and appears to have snapped a three-day winning streak to a new weekly peak, around the $2,341-2,342 range touched the previous day.

The Fed’s projection for fewer rate cuts this year is expected to weigh on the commodity.

The Federal Reserve’s (Fed) hawkish surprise on Wednesday mostly overshadowed lower US consumer inflation statistics. In fact, officials now forecast only one rate drop in 2024. As opposed to three predicted in March. Which is viewed as a major driver pulling flows away from the non-yielding yellow metal.

Traders are now looking to the US PPI and Initial Jobless Claims for short-term momentum.

Meanwhile, the move in the Fed’s estimates pushes US Treasury bond yields higher and helps the US Dollar build on its overnight rebound from a multiday low. This appears to further undercut the US dollar-denominated gold price, however geopolitical tensions in the Middle East and fresh political uncertainty in Europe may help prevent any losses. Market traders are now looking for short-term trading opportunities in the US economic calendar on Thursday, which includes the Producer Price Index (PPI) and Weekly Initial Jobless Claims data.

Daily Market Movers: Gold price becomes susceptible as lower Fed rate drop predictions boost USD.

The immediate market response to the softer US consumer inflation statistics on Wednesday faded fast after the Federal Reserve announced that it expects only one rate cut this year, hurting the non-yielding gold price.
The US Bureau of Labor Statistics (BLS) announced that inflation, as measured by the change in the Consumer Price Index (CPI), remained steady in May for the first time since June, with the annual rate falling to 3.3% from 3.4%.
The annual core CPI, which excludes volatile food and energy costs, gained 0.2% in the reported month and 3.4% year on year, compared to a 3.6% increase in April and consensus projections of 3.5%.
The Fed left interest rates steady at the end. a two-day policy meeting and anticipated the benchmark rate decreasing to 5.1% this year, implying only one rate cut in 2024, compared to a previous estimate of three cuts at the March meeting.
Furthermore, the Fed raised its neutral rate prediction to 2.8% from 2.6% before, giving the US Dollar a little boost and adding to a shift away from the USD-denominated commodities.

French President Emmanuel Macron’s decision to schedule snap elections later this month has raised political instability in the eurozone.

French President Emmanuel Macron’s decision to schedule snap elections later this month has raised political instability in the eurozone’s second-largest economy, potentially supporting the safe-haven precious metal.
Thursday’s US macro data may create short-term trading opportunities later during the early North American session ahead of the Bank of Japan (BoJ) policy decision on Friday. This has the potential to increase market volatility.