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All Eyes On U.S Inflation Data For Clues On Gold’s Next Big Move – What’s Next?

By:
Phil Carr
Published: Jun 25, 2024, 18:30 GMT+00:00

Precious metal prices are currently holding steady in wait-and-see mode as traders turn their attention to this week's highly anticipated Inflation figures for clues on the markets next big move.

In this article:

Fed’s Hawkish Surprise

Earlier this month, the Federal Reserve surprised the markets by announcing that they expect to cut interest rates just once this year – taking a hawkish stance on inflation by holding borrowing costs at a 23-year high for the seventh meeting in a row.

The Fed’s median dot-plot projections showed policymakers forecast making only one quarter-point cut this year – which is a significant change from the Federal Open Market Committee’s last “dot plot” in March, when officials signalled three cuts in 2024.

The big question now is: Will the Fed’s projections hold true or could upcoming data convince policy makers back into three cuts this year?

Upcoming PCE Inflation Data Could Influence Rate Cut Decisions

The answer to this burning question may come from the Fed’s preferred measure of inflation – The Personal Consumption Expenditures Price Index, due for release on Friday.

According to data tracked by GSC Commodity Intelligence – the Federal Reserve’s preferred measure of Inflation is expected to show a slowdown in May, adding to further evidence from the Consumer and Producer Price Index reports that inflation in the U.S has begun to ease.

May’s PCE Inflation data is forecast to have risen at an annual rate of 2.6% – down from 2.7% in April. While the core measure of inflation, the gauge most closely watched by the Fed – is expected to be 2.6%, down from the 2.8% rise seen a month earlier.

So far this year, monthly inflation in January, February and March was concerning to the FOMC, but inflation trends in April and May have been more reassuring.

While there’s no denying that a lower PCE rate could ultimately boosts the odds of multiple interest rate cuts this year – the timing of them will still be in question.

Upcoming Economic Data and Trading Opportunities

Traders will also be keep an eye on initial jobless claims, pending home sales and first-quarter GDP figures – all of which should help determine just how strong the U.S economy really is.

This data as a whole could provide critical clues into when the Fed might launch its first interest rate cut of the cycle, with traders currently pricing in the first cut to occur in September.

Extraordinary times create extraordinary opportunities and right now, these markets are a trader’s paradise. Regardless of whether the data meets, beats, or misses expectations – the outcome is guaranteed to be a license to print money, which traders will not want to miss out on!

About the Author

Phil Carrcontributor

Phil Carr is co-founder and the Head of Trading at The Gold & Silver Club, an international Commodities Trading, Research and Data-Intelligence firm.

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