GOLD: As expected, the price fell...
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he price of gold continues its downward trend after a bearish Wednesday, with the metal facing pressure from the release of somewhat hawkish Federal Open Market Committee (FOMC) Minutes. The US Dollar made gains against other currencies, and XAU/USD closed below a significant support level at $1,830 for the first time since January 3.
Investors are now focused on Friday's release of the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred measure of inflation.
The FOMC Minutes revealed that all Federal Reserve policymakers agreed that more rate hikes would be necessary to achieve inflation objectives, with "a few participants" even suggesting interest rates should be raised by 50 basis points, which would accelerate the tightening of monetary policy.
This hawkish tone helped US Treasury bond yields rally, which in turn supported the USD and weighed on the price of gold.
Thursday's economic calendar includes the second reading of the US Gross Domestic Product (GDP) figures for the last quarter of 2022, but the market does not expect any changes to the preliminary estimate of 2.9% growth. The weekly Jobless Claims release and some speeches from Federal Reserve officials could bring some action to the price of gold.
However, the most significant economic data to be released is the US Bureau of Economic Analysis (BEA) PCE Price Index on Friday. Gold traders and investors will closely monitor the data release, as Core PCE inflation is expected to rise by 0.4% on a monthly basis, but the annual figure is predicted to decline to 4.1% in January from 4.4% in December. The market reaction is expected to be straightforward, with softer-than-expected monthly PCE inflation weighing on the US Dollar and vice versa, with the price of gold reacting in the opposite direction.
Given that the CPI report already revealed sticky inflation in January, it would be surprising if this data had a long-lasting impact on markets.
The risks to the price of gold are skewed to the downside.
Investors are now focused on Friday's release of the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred measure of inflation.
The FOMC Minutes revealed that all Federal Reserve policymakers agreed that more rate hikes would be necessary to achieve inflation objectives, with "a few participants" even suggesting interest rates should be raised by 50 basis points, which would accelerate the tightening of monetary policy.
This hawkish tone helped US Treasury bond yields rally, which in turn supported the USD and weighed on the price of gold.
Thursday's economic calendar includes the second reading of the US Gross Domestic Product (GDP) figures for the last quarter of 2022, but the market does not expect any changes to the preliminary estimate of 2.9% growth. The weekly Jobless Claims release and some speeches from Federal Reserve officials could bring some action to the price of gold.
However, the most significant economic data to be released is the US Bureau of Economic Analysis (BEA) PCE Price Index on Friday. Gold traders and investors will closely monitor the data release, as Core PCE inflation is expected to rise by 0.4% on a monthly basis, but the annual figure is predicted to decline to 4.1% in January from 4.4% in December. The market reaction is expected to be straightforward, with softer-than-expected monthly PCE inflation weighing on the US Dollar and vice versa, with the price of gold reacting in the opposite direction.
Given that the CPI report already revealed sticky inflation in January, it would be surprising if this data had a long-lasting impact on markets.
The risks to the price of gold are skewed to the downside.
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