Daily digest market movers: Gold price consolidates ahead of US inflation
- Gold price is slightly below fresh all-time highs of around $2,365 amid caution ahead of the United States inflation data for March. The precious metal has experienced a great bull run in the last few weeks. However, a correction could emerge as momentum oscillators are expected to cool down after reaching extremely overbought levels and strong payroll data has shaken investors’ confidence in the Federal Reserve reducing interest rates in June.
- Gold has remained the talk of the town in the past few weeks due to a fresh escalation in Middle East tensions, which has firmed safe-haven bids and pent-up demand for precious metals by global central banks. Central banks piled up Gold inventory as a hedge against a potential economic slowdown.
- Fading expectations of a ceasefire between Israel and Palestine also keep Gold demand buoyant. The Israeli proposal of a ceasefire on April 9 didn’t match the demands from Hamas, which wants Israel to withdraw its forces and allow displaced Palestinians to return to their homes.
- In Wednesday’s session, the strength of the Gold will be tested by the US inflation data, which will provide hints about how much and how soon interest rates will be reduced by the Federal Reserve. The Fed anticipated starting to lower borrowing costs from the June meeting. However, upbeat labor market data and policymakers’ comments about delaying rate cuts have dented these expectations.
- US monthly headline and core CPI, which strips off volatile food and energy prices, are both forecasted to have risen at a slower pace of 0.3% from 0.4% in February. In the same period, economists expect the annual headline inflation to accelerate to 3.4% from 3.2%, while the core inflation is anticipated to decelerate to 3.7% from 3.8%.
- Hot figures would allow the Fed to delay rate cut plans, while softening inflation data will boost Fed rate cut expectations for June.
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