(Kitco News) – The gold market is off to a good start after the first trading week of 2024, according to several analysts, even though the price has suffered some losses as it consolidated at higher levels between $2,000 and $2,050 an ounce. Is.Thank you for reading this post, don't forget to subscribe!
February gold futures ended the week at around $2,050 an ounce, down 1% from last week.
According to some analysts, the market is caught in a tug-of-war as investors try to guess the Federal Reserve’s next move. The market is currently considering a 68% chance of the first rate cut at the March monetary policy meeting.
However, some economists have said that after December’s employment data, it is unlikely that the US central bank will be ready to cut rates early in the new year. The latest employment data shows 216,000 jobs were created last month and wages rose 0.4%.
“The jobs report reinforces the view that the Fed will continue to push against the initial rate cut expected by the market until signals become clearer,” said fixed income analysts at TD Securities. “That said, we expect inflation to continue to moderate over the next few reports, which should leave the door open for a rate cut in the second quarter.”
Meanwhile, Philip Strible, chief market strategist at Blue Line Futures, said expectations for a rate cut remain high as some analysts believe the latest jobs report shows cracks in the labor market are beginning to appear. He said the large number of government jobs figures in the December report appeared to be distorting the data.
Strieble said that with a rate cut in March, gold should find good support above $2,000 an ounce; However, he said he doesn’t know if there is enough momentum to push prices above $2,050 an ounce.
“The coin is bullish right now and that will keep gold in this consolidation range,” he said.
James Stanley, senior market strategist at Forex.com, said price action this week suggests gold is range bound at $2,050 in the near term; However, he said gold bears will face a tough path to the downside as the Federal Reserve is still expected to lower interest rates this year.
“I think it’s going to take a long time for this resistance to subside … but it may take a month or two,” Stanley said. “This thing can move forward when the Fed formally makes the change. But real rates will need to get higher before they can declare a ‘W’ on inflation, and with an election year I think they’ll want to pivot that a little closer to November. ideally [gold] This should push it below 2k and wash out the first few longs. “Again, more money on the sidelines could help going forward.”
Although markets will return to a full five-day week next week, investors are expected to digest December’s employment data. The highlight will come late next week with the December Consumer Price Index report. According to some economists, the inflation data could strengthen the Federal Reserve’s move in March.
Some economists have pointed out that although consumer prices have fallen from 2022 highs, the Federal Reserve still has work to do to bring inflation down to its 2% target.
Expectations are that headline inflation will be around 3%; However, core inflation is expected to remain around 4%, double the central bank’s target.
Next week’s economic data:
Thursday: US CPI, weekly jobless claims
Friday: US PPI
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