Daily Digest Market Movers: Gold price lacks follow-through buying amid Fed’s hawkish outlook

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  • The US inflation data came in line with market expectations, suggesting that the Federal Reserve is going to stay on track to cut interest rates later this year and lending some support to the Gold price.
  • The Core US PCE Price Index – the Fed's preferred inflation gauge that excludes food and energy prices – climbed 0.4% in January and the yearly rate eased to 2.4% from 2.6% in the previous month.
  • Meanwhile, the CME Group's FedWatch Tool indicates that markets are still pricing in the possibility of the first interest rate cut in June and the bets were reaffirmed by comments by several Fed officials.
  • Atlanta Fed President Raphael Bostic said that the speed at which US inflation is easing means it will likely be appropriate for the US central bank to start cutting interest rates during the summertime.
  • San Francisco Fed President Mary Daly said central bank officials are ready to lower interest rates as needed but emphasized there is no urgent need to do so given the strength of the US economy.
  • Cleveland Fed President Loretta Mester said the recent inflation data suggests that policymakers have more work to do to cool price pressures but didn't change her view for three rate cuts this year.
  • New York Fed President John Williams reiterated that the next move for the US central bank is likely to be cut to its interest rate target, though noted there is no sense of urgency to do that.
  • The US Treasury bond yields aren’t far from their recent highs, which, along with an extension of the risk-on rally across the global equity markets, keeps a lid on further gains for the safe-haven XAU/USD.

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