Gold remains stable as traders watch for cues on US interest rate cuts
Gold prices stabilized on Tuesday as investors awaited a series of US economic data to gain more clarity on the Federal Reserve’s timeline for interest rate cuts. At 9:33 a.m. ET (1433 GMT), spot gold remained unchanged at $2,021.89 per ounce, while US gold futures also held steady at $2,023.20. Daniel Pavilonis, senior market strategist at RJO Futures, noted that the gold market is currently hovering just above the $2,000 mark and appears to be in a neutral state. Pavilonis added that there is a lot of uncertainty surrounding the economic situation in the United States.
This week, market focus will be on the US flash PMI report on Wednesday, fourth-quarter advance GDP estimates on Thursday, and personal consumption expenditures data on Friday. Last week, Federal Reserve officials stated that they require more inflation data before making any decisions regarding interest rate cuts, and that the earliest possible time for cuts to begin would be in the third quarter. According to CME’s FedWatch Tool, market expectations are for the US central bank to keep rates unchanged at the end of the policy meeting on January 30-31, and the timing of the first interest rate cut has been pushed back.
Han Tan, chief market analyst at Exinity Group, mentioned that if the prospects of a Fed rate cut in March continue to diminish, it may cause gold to fall below the $2,000 mark, although more dovish signals could help support the metal above that level. Lower interest rates reduce the opportunity cost of holding gold.
In other news, the European Central Bank (ECB) is scheduled to meet on Thursday, and it is anticipated that they will maintain their current monetary policy.