Gold prices remained relatively steady on Wednesday, following a two-day decline, as Investors eagerly await crucial U.S. inflation data scheduled for later this week. Bullion hovered above the $2,300 mark per ounce after experiencing a 3% drop in the preceding sessions, driven by diminishing tensions in the Middle East.
Despite recent declines, further selling pressure on gold may be limited, with commodity Investors advisors hesitant to liquidate their positions above the $2,200 threshold. However, macro Investors face constraints amid the relentless ascent of the U.S. dollar and rising Treasury yields, dampening the precious metal’s appeal as a safe-haven asset.
Investor focus remains squarely on Friday’s release of the personal consumption expenditures index, which serves as the Federal Reserve’s preferred gauge of inflation. Expectations point towards continued price pressures in March, potentially delaying anticipated rate cuts and posing a challenge for gold, which lacks yield.
Recent shifts in market sentiment have led to a notable decline in expectations for rate cuts by the Fed, with the likelihood of a reduction in June plummeting to just 14% according to swaps market data. Some Investors even speculate that the Fed may refrain from cutting rates altogether this year.
Despite the recent downturn, gold remains up by approximately 17% since mid-February, supported by geopolitical tensions, central bank purchases, and increased buying from Chinese retail investors. However, the near-term outlook for the precious metal hinges on the outcome of key economic indicators, particularly inflation data, which will offer insights into the Fed’s future monetary policy decisions.
As investors await crucial U.S. economic data, including durable goods orders and GDP figures, the trajectory of gold prices will likely be influenced by developments in the broader market landscape. While geopolitical tensions and monetary policy expectations continue to fluctuate, gold’s resilience as a store of value remains a focal point for investors navigating volatile market conditions.
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