Daily Digest Market Movers: Gold price continues to draw support from rising Fed rate cut bets
- Traders are pricing in a 70% probability that the Federal Reserve will start cutting rates in June, which keeps the US Dollar bulls on the defensive and acts as a tailwind for the non-yielding Gold price.
- Several Fed officials, however, expressed concern about still-sticky inflation and stronger-than-expected US macro data, helping limit USD losses and capping the precious metal's upside.
- Atlanta Fed President Raphael Bostic said on Monday that he expects the US economy and inflation to slow gradually and anticipates the US central bank to lower the policy rate only once this year.
- Chicago Fed President Austan Goolsbee noted that three cuts in 2024 were in line with his thinking, though the US central bank needs to see progress in inflation and strike a balance with its dual mandate.
- Separately, Fed Governor Lisa Cook said that inflation has fallen considerably, though the path of disinflation, as expected, has been bumpy and uneven, while the labor market has remained strong.
- Traders look to Tuesday's US economic docket – featuring Durable Goods Orders, Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index – for some impetus.
- The market focus, however, will remain glued to the US Personal Consumption Expenditures (PCE) Price Index data, or the Fed's preferred inflation gauge scheduled for release on Friday.
- In the meantime, geopolitical risks stemming from the protracted Russia-Ukraine war and concerns about whether the UN resolution will lead to an actual ceasefire in the Gaza Strip could underpin the XAU/USD.
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