Explore market dynamics. The USD is strong post-FOMC, while Gold remains steady amid rate cut speculations. Stay informed!
After the recent Federal Open Market Committee (FOMC) meeting, the USD remained strong, while Gold continued its upward momentum despite tempered rate cut expectations. Federal Reserve Chair Jerome Powell’s comments influenced market sentiments, reducing the probability of a March rate cut from 50/50 % to 35%.
Powell emphasized the need for greater confidence in inflation hitting the target, stating, “I don’t think it’s likely that we’ll reach a level of confidence by the time of the March meeting; I don’t think that’s the base case.” Despite the Fed’s caution, financial markets still anticipate a cumulative 150 basis points cut in interest rates throughout the year.
Dollar Strong, Gold Steady Post-FOMC Rate Cut Revisions
The upcoming US Jobs Report (NFPs) gains heightened significance, especially after the recent US ADP Report fell short of expectations, with actual figures at +107k versus the forecasted +145k. Nonfarm payrolls are projected to reveal 180k new jobs added in January, down from 216k in December, while the unemployment rate is expected to rise to 3.8% from the previous 3.7%.
After hitting a multi-week low of $2,002/oz. In mid-January, Gold displayed a resilient performance, reaching a pre-FOMC high of $2,056/oz. Before settling around $2,042/oz. The precious metal has achieved six consecutive higher lows and is trading above all three simple moving averages for the first time in a month. The CCI indicator suggests that Gold is approaching overbought territory, with initial support around $2,032/oz., followed by $2,010/oz. And $2,002/oz. A breach of Wednesday’s high could propel Gold towards $2,088/oz. as the initial short-term target.
Retail trader data indicates that 58.92% of traders are net-long, with the long-to-short ratio at 1.43 to 1. The number of traders net-long has decreased by 9.22% compared to yesterday and is 15.32% lower than last week, while the number of traders net-short has increased by 5.16% compared to yesterday and is 7.10% higher than last week.
In summary, the US Dollar remains resilient post-FOMC, with rate cut expectations tempered by Powell’s cautious comments. Gold, on the other hand, sustains its upward trajectory, exhibiting strength despite subdued rate expectations. The focus now turns to the eagerly awaited US Jobs Report for further insights into the economic landscape.