Today, gold's pivotal levels stand at 2375 and 2355, with market sentiment largely influenced by anticipation surrounding Powell's speech scheduled for tomorrow. Traders are advised to exercise patience and wait for optimal market structures to form before executing trades, recognizing the importance of strategic timing.
Last week saw marginal gains for the US dollar, driven by declines in the Japanese yen. Federal Reserve speakers maintained a neutral stance leading up to this week's Consumer Price Index (CPI) reading, which holds significant implications for Fed expectations. The latest US University of Michigan survey for May reignited fears of stagflation, as headline figures dropped from 77.2 to 67.4, accompanied by declines in both current conditions and forward expectations. Concurrently, inflation indicators rose, with the 1-year ahead projection at 3.5% and the 5-10-year projection at 3.1%.
Fed speakers, including Bowman, Bostic, Logan, Goolsbee, and Kashkari, expressed concerns over the uptick in inflation but stopped short of clearly signaling a potential rate hike. Bostic reiterated his outlook of one rate cut this year, citing higher-than-expected inflation and a slowdown in household spending momentum. Wednesday will see the release of two key reports on consumer prices and retail sales, providing insight into the real threats to the economic outlook. With April's payroll and wage growth showing signs of deceleration, persistent inflation poses risks to household budgets and overall economic growth.
Neil Dutta, head of US economics at Renaissance Macro, highlights the potential downside risk to the growth outlook if inflation remains persistent, particularly impacting real incomes amid ongoing labor market dynamics.
In summary, gold traders navigate a complex landscape shaped by upcoming economic data releases, Fed speeches, and inflationary pressures, emphasizing the importance of informed decision-making amidst market uncertainty.