- Gold price holds gains slightly below $2,200 ahead of the US core PCE Price Index data for February. The Federal Reserve’s preferred inflation gauge is expected to have grown at a steady pace of 2.8% on year. The monthly underlying inflation data is forecasted to have increased by 0.3%, slowing from January’s 0.4% advance. Investors will keenly focus on the inflation data to gauge when the Fed may begin trimming interest rates.
- Stubborn inflation data could allow the Fed to maintain a hawkish rhetoric. Fed policymakers have been reiterating that rate cuts are only appropriate when they are convinced that inflation will return sustainably to the 2% target. Sticky price pressures, in turn, would weaken the Gold’s appeal as it would increase the opportunity cost of investing in it.
- According to the CME FedWatch tool, traders are pricing in a 60% chance that a rate cut will be announced in June. The chances for Fed pivoting to rate cuts in June have dropped from 70% on Thursday after a slightly hawkish guidance from Fed Governor Christopher Waller.
- Christopher Waller said in a speech at an Economic Club of New York on Wednesday that the Fed needs not to rush for rate cuts. However, he keeps hopes of rate cuts alive saying, “Further progress expected on lowering inflation will make it appropriate for the Fed to begin reducing the target range for the federal funds rate this year," reported Reuters.
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