GOLD PRICE FORECAST: XAU/USD STILL TRADES HORIZONTALLY AMIDST CONFUSION OVER OUTLOOK FOR RATES

Gold price continues lazily flatlining as markets debate the future of interest rates.

Jerome Powell said privately the Federal Reserve expects one more rate hike this year but markets disagree.

US Dollar suffers negative outlook versus major peers as Fed handcuffed by banking crisis – XAU/USD positive.

Gold price continues its comatose flatline in the $1,950s-60s in the early European session on Thursday. This comes in spite of the news that Federal Reserve Chairman Jerome Powell admitted privately that the Fed still sees one more rate hike this year. A market-based gauge of future rate hikes, however, is barely unchanged from the day before, and still shows odds favoring the Fed doing nothing in May. 

Powell privately believes in one more hike but markets pass-on-by

Republican Representative Kevin Hern reported to Bloomberg that Jerome Powell admitted he still sees one more rate hike, when he was in a private meeting with US lawmakers on how much further the central bank will raise interest rates this year.

Despite the revelation, the Fed Funds Futures Curve, a market-based gauge of what the Fed will do at future meetings, has only increased the chances of rate hike in May to 45% from 43% previously. The same gauge sees odds favoring the Fed not hiking rates at all, with a 55% probability of such an outcome at the May FOMC meeting. 

Higher rates are negative for XAU/USD as they increase the opportunity cost of holding Gold vis-a-vis staying in cash or cash alternatives.