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Gold Under Offer
Gold prices are looking a little softer through the middle of the week with gold futures turning lower from last week’s highs. The safe-haven metal has been range-bound over recent months with futures prices tracking a 2,275.43 – 2,427.54 range. The main driver behind the shift in gold prices has been the changeable landscape with regard to the market’s Fed expectations. Strong expectations of forthcoming easing helped drive gold prices higher earlier in the year. A subsequent period of uncertainty saw prices settle into consolidation and, more recently, a hawkish shift in the Fed outlook has seen gold prices come under fresh pressure.
Shifting Rates Outlook
The Fed is now projecting just one rate cut down from three earlier in line with a hotter inflation forecast over the coming year. Traders are now trying to establish a view on when the Fed is likely to cut, while noting the risks that should inflation remain sticky (or rise again) that easing could be delayed until next year. In this scenario, gold prices are likely to come under heavier selling pressure as USD trades higher.
PCE Due on Friday
Looking ahead this week, the big focus will be US Core PCE data on Friday. The data is the Fed’s preferred inflation gauge and so will be highly market moving. The basic read is that any upside surprise will drive USD higher, weighing on gold, while any downside surprise should see USD weaken allowing gold room to rally.
Technical Views
Gold
The latest test of the 2,364.93 level has seen price rejected with gold now pushing back towards the 2,275.43 level. This is a key support area for gold and a break here will be firmly bearish, opening the way for a deeper move down towards the bull channel lows and 2,149.72 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.