Daily digest market movers: Gold price capitalizes on firm Fed rate cut prospects
- Gold price turns sideways after refreshing an all-time high near $2,260. The demand for the precious metal remains buoyant as market expectations for the Federal Reserve starting its rate-cut cycle in June escalate.
- Fed Chair Jerome Powell said Friday at a that the latest US inflation data was "along the lines of what we would like to see," while interviewed by public radio's "Marketplace" program, boosted rate-cut expectations for June. According to the CME FedWatch tool, traders see a 68% chance that rate cuts will be announced in June. The expectations have increased from the 60% observed before the release of February’s core PCE Price Index data on Friday.
- While Fed Powell remains confident in progress in easing inflation, he acknowledged that the central bank doesn’t need to hurry for rate cuts with the economy on a strong footing. He recognized the need to see more progress on inflation before cutting interest rates and cautioned the need to be careful on rate cuts, citing strong economy and labor market conditions.
- The monthly and annual core PCE inflation grew by 0.3% and 2.8% in February as expected. However, January’s estimates were upwardly revised to 0.5% on month and 2.9% on year from the 0.4% and 2.8% increases previously estimated, respectively.
- The Fed’s preferred inflation measure is at its lowest level in almost two years, supporting higher Fed rate cut expectations for June.
- This week, the United States NFP report for March, scheduled for Friday, is the main event to look at as it will likely provide more clarity on when the Fed could start reducing interest rates.
- In Monday’s session, market participants will keenly focus on the US ISM Manufacturing PMI for March, which will be published at 14:00 GMT. The factory data is estimated to increase to 48.4 from 47.8 in February, below 50.0 or the 16th month in a row. A figure below the 50.0 threshold suggests that the business activity in the US manufacturing sector contracted in this period.
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