- Gold prices slightly fell but remained close to a month’s highest level. Lower US CPI data led to speculations of a rate cut by the Fed in September. Analysts are discussing the likelihood of the Federal Reserve cutting rates soon.
- Gold prices are close to a month’s highest level. As you follow from CoinOtag, the US CPI data came below expectations. After this, gold prices started to rise. The shiny metal gave back some of its gains in the early hours of Thursday. However, it continues to fluctuate close to a month’s highest level. This trend stems from expectations that Treasury yields will fall and the US Dollar will weaken due to the impact of weaker-than-expected US consumer inflation data.
- The US CPI showed a smaller increase than expected in April on Wednesday. This supported expectations of a possible rate cut by the Federal Reserve. CPI increased by 0.3% last month, following a 0.4% increase in March and February. Thus, it signaled a cooling trend in inflation. Economists were expecting a monthly increase of 0.4%. This data led to a 0.6% drop in the dollar against a basket of major currencies. Therefore, this increased the attractiveness of gold for foreign investors. Also, the yield of the benchmark 10-year Treasury bonds fell to the lowest level of the last month.
Gold prices slightly fell but remained close to a month’s highest level. Lower US CPI data led to speculations of a rate cut by the Fed in September. Analysts are discussing the likelihood of the Federal Reserve cutting rates soon.
Market expectations and analysts’ perspectives
According to the CME FedWatch Tool, investors are currently pricing the likelihood of the US cutting rates in September at 74%. Low interest rates generally reduce the opportunity cost of holding non-yielding assets like gold. However, analysts are cautious about the timing of potential rate cuts. Phillip Streible, chief market strategist at Blue Line Futures, points out that inflation data showed that the Fed could consider a rate cut soon.
Gold price forecast: Cautious bull!
Market analyst James Hyerczyk evaluates the short-term outlook and technical picture of gold. Considering the current market conditions, gold will face resistance at the psychological level of $2,400. Falling inflation and potential rate cuts create a supportive environment for gold. However, any recovery in the dollar or Treasury yields could pose a challenge. Overall, the short-term outlook for gold continues to be a cautious bull, depending on more economic data and Fed actions.
Conclusion
Gold prices slightly fell but remained close to a month’s highest level. Lower US CPI data led to speculations of a rate cut by the Fed in September. Analysts are discussing the likelihood of the Federal Reserve cutting rates soon. The short-term outlook for gold continues to be a cautious bull, depending on more economic data and Fed actions.
