Bullion remains traded above the key mark of $2,000 and is consolidating recent gains. After starting the week in the red, gold recovered strength, jumping to $2,030. The price of the yellow metal is just 2% below its historical record reached in early 2020 at $2,075.
With just three weeks to go to the next FOMC meeting, investors are waiting for US inflation data, which will be released later today (12:30 CET). Analysts forecast the annual data to be announced at +5.2%, 0.8% lower compared to the +6.0% of last month. The monthly inflation figure could be a +0.2% (vs +0.4% last month). If this declining trend is confirmed, there could be space for further recoveries of gold.
Moreover, a few hours later (at 20.00 CET), the minutes of the last FOMC meeting will be released. Traders and investors hope to get more indication from the report about what the next move of the US central bank will be.
At the moment, markets are pricing in almost a 70% probability of another hike by 0.25% in the next meeting, while the remaining 30% is for the Fed holding rates at the current level of 5.00%.
Probably the most important thing that we can see from the CME FedWatch Tool (which elaborate the Fed rate expectations of the markets for the next 18 months) is that currently, investors see a peak at 5.25% in the next couple of meetings. After this, interest rates are expected to decrease to 4.5% by the end of 2023 and to 3-3,5% in the second half of 2024. All this could represent the perfect set-up for a positive environment for gold.
Carlo Alberto De Casa is an external Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. His precious metals market commentary has featured in the likes of Forbes, Reuters, CNBC, and Nasdaq.
With a credential background in Economic Finance and International Exchange (MA), his critical analysis of gold and silver markets’ performance is frequently quoted by leading publications, week on week.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.
