Where is the heading? gold price? Investors look for the answer above all in the path of the Fed’s interest rates.
On Monday, July 1, the price of gold struggles to gain significant ground and fluctuates in a narrow trading range below the $2,330 level during the start of the European session.
The market hesitancy stems in part from ambiguity over the Federal Reserve’s upcoming decisions on easing monetary policy.
Although last Friday’s headline US inflation data suggests potential rate cuts in September and December, recent comments from members of the Federal Open Market Committee (FOMC) seem to be leaning towards a more cautious approach, dampening hopes for immediate rate cuts.
In this context, in which the dollar could be pushed further upwards, the gold price It doesn’t find a clear direction. What do analysts expect?
Gold Price, How the Fed Influences the Metal
I gold futures they travel around 2,335 dollars, falling and also theXAU/USD (spot gold) falls to $2,326 after two hours of the opening of the European session.
Friday, the Market bets on Fed rate cut by September and again in December they rose, after the Personal Consumption Expenditure Index showed that inflation did not rise at all from April to May.
PCE followed an unrevised 0.3% increase in April data last month, as consumer spending rose modestly. According to CME’s FedWatch tool, traders now see a roughly 68% chance of a Fed rate cut in September, up from 64% before the inflation data was released.
A loose monetary policy should push up bullion, which is more attractive and profitable than the dollar if the cost of money falls (and with it yields and the strength of the greenback).
However, sentiment towards Fed policy is very uncertain indeed. Richmond Fed President Thomas Barkin said that services still have room to push prices higher.
San Francisco Fed President Mary Daly told CNBC that cooling inflation shows monetary policy is working, but it’s still too early to say when that will be. it is appropriate to cut rates.
This, in turn, should prevent any significant appreciation of the yellow metal unwavering ahead of major U.S. macroeconomic releases this week, including Friday’s NFP report.
Gold, not just rates. What is influencing the metal?
The persistent ones geopolitical tensions and the uncertainty over the final outcome of the early elections in France still give some support to the dollar as safe haven assetpenalizing the price of gold.
Meanwhile, the growing odds of a Trump presidency have raised concerns about the imposition of aggressive tariffs, which could fuel inflation and trigger higher interest rates. This, in turn, pushes U.S. Treasury yields to a multi-week high and should cap any meaningful upside for the yellow metal.
The complex interplay between rate expectations, geopolitical developments and economic indicators will continue to dictate the pace of gold price in the next few days according to analysts.
