Daily digest market movers: Gold price awaits Fed Powell’s guidance on interest rates
- Gold price falls slightly from a near record high of $2,141.85 amid caution among market participants ahead of Federal Reserve Chair Jerome Powell’s testimony before Congress. Investors will keenly watch the guidance from Jerome Powell on inflation, the labor market, and interest rates.
- While market participants want to know about the time frame and the degree of rate cuts this year, Powell is likely to be reluctant to offer in-depth information on rate cuts. Fed policymakers are less likely to focus on policy normalization before gaining confidence that inflation will come down to the 2% target. The Fed wants to see inflation declining for months as evidence before considering rate cuts.
- Jerome Powell is expected to maintain hawkish rhetoric as the progress in price pressures decelerating towards the 2% target is slow and labor market conditions are resilient.
- Powell’s guidance will impact market expectations for rate cuts in the June policy meeting. As per the CME Fedwatch tool, the chances for a 25 basis points (bps) rate cut for June’s policy meeting have increased to 58% from 53% on Tuesday.
- Apart from Powell’s testimony, market participants will focus on the US ADP Employment Change for February and JOLTS Job Openings for January, which will be published at 13:15 and 15:00 GMT, respectively. US private employers are forecasted to have hired 150K job-seekers against the prior reading of 107K and have posted 8.9 million new job openings in January against 9.027 million in December.
- The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, continues its losing spell for the fourth trading session on Wednesday. The USD Index hovers near a weekly low of around 103.60 as weak ISM Manufacturing and Services PMIs for February have pointed to slowing economic growth.
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