Fed Chair Powell Will Likely Keep Life Difficult for XAU/USD
Gold prices rallied over the past 24 hours heading into Wednesday’s highly anticipated FOMC rate decision. Chairman Jerome Powell and company are widely expected to raise benchmark lending rates to a zone of 5.25% - 5.50% following a pause at the previous meeting. This has been amidst US economic resilience to this monetary tightening cycle.
According to the Citi Economic Surprise Index tracking the United States, the gauge sits at 70.30. That is around highs from April 2022. The more positive the reading is, the more that means economic data has generally been outperforming expectations and vice versa. In fact, the index bottomed in the summer of 2022 when it was deeply negative. Since then, it has been steadily rising.
Meanwhile, even though headline inflation has eased without causing a surge in unemployment, core CPI readings remain sticky. These exclude volatile components, such as food and energy prices. As such, the Fed is likely to keep the door open to further tightening if necessary as it is likely too early to conclude that the fight against inflation is over.
This will likely continue pouring cold water on expectations of a pivot, which surged after Silicon Valley Bank collapsed in March. But, thus far, the economy has for the most part remained unscathed. There is a weak consensus of a further hike to 5.50% - 5.75% by year-end. More importantly, financial markets have essentially fully priced out cuts this year.
SELL 1973 - 1970💯💯
✅ TP1: 1965
✅ TP2: 1960
🛑 SL: 1977
According to the Citi Economic Surprise Index tracking the United States, the gauge sits at 70.30. That is around highs from April 2022. The more positive the reading is, the more that means economic data has generally been outperforming expectations and vice versa. In fact, the index bottomed in the summer of 2022 when it was deeply negative. Since then, it has been steadily rising.
Meanwhile, even though headline inflation has eased without causing a surge in unemployment, core CPI readings remain sticky. These exclude volatile components, such as food and energy prices. As such, the Fed is likely to keep the door open to further tightening if necessary as it is likely too early to conclude that the fight against inflation is over.
This will likely continue pouring cold water on expectations of a pivot, which surged after Silicon Valley Bank collapsed in March. But, thus far, the economy has for the most part remained unscathed. There is a weak consensus of a further hike to 5.50% - 5.75% by year-end. More importantly, financial markets have essentially fully priced out cuts this year.
SELL 1973 - 1970💯💯
✅ TP1: 1965
✅ TP2: 1960
🛑 SL: 1977
- Advance GDP q/q
- Unemployment Claims