Federal Reserve officials' hawkish remarks this week; will gold peak at 2430? Let's see next week's PCE data.
This week, US labor market indicators once again showed the resilience of the economy, while numerous Federal Reserve officials have repeatedly denied a quick rate cut; looking ahead to next week, the inflation indicator PCE is bound to be the market focus. Gold experienced a massive swing this week, falling to the 2320 level before rebounding and fluctuating. After a late-day surge that failed to break above last week's high of 2430, it retreated, ultimately closing below the 2400 level.
Time:
2024-04-20 08:43
First Gold NetEase, April 20: This week, US labor market indicators once again showed economic resilience, while numerous Federal Reserve officials have repeatedly denied a quick rate cut; looking ahead to next week, the inflation indicator PCE will be the market's focus.
Gold experienced significant volatility this week, falling to the 2320 level before rebounding and fluctuating. It surged at the end of the day, but failed to break above last week's high of 2430 before falling back, ultimately closing below the 2400 level.
This week, in addition to US economic data, Federal Reserve officials made numerous appearances, but their remarks were almost uniformly hawkish, denying a quick rate cut and even suggesting further rate hikes were possible.
On Thursday, New York Fed President Williams became the latest US rate-setter to echo Fed Governor Waller's February view that a rate cut is not imminent.
When asked about the possibility of a rate hike, Williams said that while it was "not" his baseline expectation, it was still possible if necessary.
Minneapolis Fed President Neel Kashkari also stated that the Fed needs more confidence in falling inflation before cutting rates, and that rate cuts could be pushed back to after 2024, with the first rate cut "possibly" not until next year.
Kashkari is one of the more hawkish policymakers at the Fed in recent years, but he does not have a voting right on FOMC interest rate decisions this year.
On the same day, Atlanta Fed President Bostic said he was comfortable keeping interest rates steady and reiterated his belief that a rate cut is not appropriate before the end of the year.
On Tuesday, Fed Chair Powell offered no guidance on when a rate cut might be possible, instead stating that monetary policy needs to remain restrictive for a longer period.
In addition, Fed Vice Chair Jefferson also stated that evening that if US inflation does not slow as expected, the central bank of the world's largest economy will be prepared to maintain its tight monetary policy.
Previously, the market initially expected the Fed to cut rates for the first time in March, but as labor market and inflation data for the first three months of the year continued to exceed expectations, the predicted rate cut was first pushed back to June, and now to September.
First, the US Consumer Price Index (CPI) rose 3.5% year-on-year in March, the highest level since September 2023, exceeding market expectations. This also marked the third consecutive month of unexpected acceleration in the US CPI.
Second, on Thursday, the seasonally adjusted initial jobless claims in the US were unchanged at 212,000 for the week ending April 13, again below expectations.
Looking ahead to next week, the Federal Reserve, and the March Personal Consumption Expenditures (PCE) price index, which Powell values most, will be released.
On Tuesday, Powell mentioned that the Fed's preferred inflation indicator—the February Personal Consumption Expenditures (PCE) price index—was at an annual rate of 2.8%, still far from the target.
Currently, the market expects March PCE and core PCE to be 0.2-0.3% month-on-month, but recent forecasts for food and core goods are lower than actual values, and the possibility that the actual values for March PCE and core PCE month-on-month will be higher than 0.3% cannot be ruled out.
Despite lower-than-expected PCE inflation in March, the probability of a Fed rate cut in June has still significantly decreased due to the higher-than-expected PCE month-on-month in January and February.
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Although gold prices rose this week, market volatility has clearly increased. While the US-UK agreement is symbolic, its content is limited and insufficient to alleviate concerns about a global economic slowdown. Therefore, gold prices will continue to fluctuate between safe havens and policy signals, closely monitoring the Federal Reserve's interest rate expectations and global trade sentiment.