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Investing.com – It fell during trading today, Tuesday, after the US dollar rose, as prices witnessed noticeable fluctuations in morning trading, as gold moved in a narrow range in anticipation of the upcoming price that will be issued tomorrow, Wednesday.
The markets are also awaiting the release of the Fed’s preferred inflation indicator, which should influence the next meeting.
On the other hand, hawkish comments from officials and persistently high inflation prompted one of the major international banks to revise its outlook for the first half of the year.
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gold now
It recorded a decrease during the current moments, to reach levels near $ 1835 an ounce, by 0.35%.
The futures contracts for the yellow metal also declined during these moments of today’s trading, at levels near $ 1843 an ounce, by 34%.
While it rose in the current moments to the levels of 104 points, an increase of 0.25%.
Gold prices hit their highest levels since April 2022 this month, but have since lost about $120 after a series of economic data showed signs of resilience in the US economy and labor market scarcity, raising fears that interest rates will remain high for a longer period.
A look at technical indicators and movement rates:
Federal minutes
Markets are awaiting the release of the US Federal Reserve’s minutes tomorrow, to explore the Fed’s next direction.
Financial markets expect the bank to raise benchmark interest rates above 5 percent by May, and to a peak of 5.3 percent in July.
Investors are also awaiting core personal consumption expenditures in the US, which is the Federal Reserve’s preferred measure of inflation, and GDP figures due this week.
In the previous minutes of the December 13-14 meeting, all officials at the Federal Reserve’s policy meeting agreed that the US central bank should slow down the pace of large interest rate increases, in a way that allows them to continue increasing the cost of credit to control inflation, but in a gradual manner aimed at reducing risks to economic growth.
The minutes of the meeting showed that policy makers are still focused on controlling the pace of price increases, which may become more frantic than expected, and that they are concerned about any “misperception” in financial markets of their lack of commitment to fighting inflation.
“Most participants emphasized the need to maintain flexibility and offer several options when moving policy to a more restrictive position,” the minutes said, noting that officials may be willing to ease into quarter-percentage-point increments starting from the January 31-February 1 meeting, which is That has already happened, but they are also still open to adopting higher-than-expected rates if inflation continues to rise.
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gold forecast
In the latest research note on commodities analysts at Commerzbank, they said they cut their mid-year gold price forecast to $1,800 an ounce, down from the previous estimate of $1,850, as rising expectations continue to weigh on the precious metal.
Commerzbank said: “Hopes of an end to the rate hike cycle in the near future in the US turned out to be premature. Therefore, market participants are likely to proceed with caution.”
However, the most significant impact on the bank’s near-term bearish outlook for gold is rising bond yields, with some Fed members saying the central bank may have to continue aggressively raising interest rates to calm inflation.
On Thursday, the US producer price index slowed but at a slower pace than last month, coming in at 6% y/y vs. 5.4% expected. Meanwhile, on Tuesday, the Consumer Price Index (CPI) rose 6.4% for the year in January, beating expectations for a 6.2% rise.
Tight comments and hot inflation data pushed the 10-year yield to a four-month high of 3.9%. Markets are starting to price in a potential 50 basis point rally from the Federal Reserve next month.
Due to changing market expectations, the bank’s analysts now see the US federal funds rate peaking at 5.5%.
Although the Deutsche Bank sees gold prices falling in the near term, analysts remain optimistic that growing recession fears will eventually support gold prices by the end of the year.
“This should ensue with a lasting recovery in the second half of the year, after which the US economy is likely to see a downturn that will likely lead to renewed expectations of rate cuts. So we are sticking to our year-end forecast of $1,950.”
