Summary:
Gold steadied near one-month highs post-US inflation data meeting expectations, with a 62% likelihood of a June Fed rate cut factored in by markets.
Gold prices were barely changed around their one-month highs on Friday after US inflation data came in line with expectations last month. Markets are currently pricing in a 62% chance of a Fed Rate Cut in June.
Core PCE price index increased 0.4% for the month, amid an expected jump in personal income. The reading also reflected an ongoing shift to services over goods as the economy recovers from the pandemic.
Both the headline and core measures remain ahead of the 2% target, even though the core reading was the lowest since February 2021. The road to disinflation remains as bumpy as policymakers expected.
Many economists saw the rise as impacted by seasonal factors and shelter increases unlikely to persist, so bullion defied the headwind to undergo a bullish breakout amid geopolitical feuds.
Russian President Vladimir Putin warned the West of the risk of nuclear war if they send their own troops to fight for Ukraine, saying Moscow had the weapons to strike Western targets.
French President Emmanuel Macron on Monday said the possibility of sending Western troops to Ukraine “cannot be ruled out” but the US, the UK and Germany have all turned down the idea.
Gold showed some bullish bias above the 50 SMA with $2,060 in sight. Considering still-high Treasury yields, its room to rally far beyond that level could be limited.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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