Gold bounces on dovish Fed

The FOMC statement seen as dovish, investors dump USD
Gold is bouncing from the 1304 level and is past the 1,310 level

Flavio Tosti Independent Analyst

Gold is trading at around 1,312 a troy ounce up 0.66% on Wednesday as the FOMC surprised the market with a dovish statement.

The Fed leaves rates unchanged as it was widely expected and a hike in June is still on the cards, however, the Fed may not be eager to keep inflation depressed.

On inflation the Fed says:

“On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.”

The Fed sees things as “symmetric”. Analysts say that it implies that the Fed will allow inflation to run a bit high before moving hiking rates.

As a reminder, the US macroeconomic data has been rather constructive of late. Core Consumer Price Index (CPI) rose from 1.8% YoY to 2.1% in April while Core Personal Consumption Expenditure (PCE), the Fed's favorite gauge of inflation, increased from 1.6% to 1.9% in April and wage growth stood at 2.7% above 2.5% seen earlier.

The next event of significance that can move gold is the US Non-Farm Payroll scheduled on Friday at 12:30 GMT.

Author

Flavio Tosti

Independent Analyst

EUR/USD struggles near 1.1850, with all eyes on US CPI data

EUR/USD holds losses while keeping its range near 1.1850 in European trading on Friday. A broadly cautious market environment paired with a steady US Dollar undermines the pair ahead of the critical US CPI data. Meanwhile, the Eurozone Q4 GDP second estimate has little to no impact on the Euro.

GBP/USD recovers above 1.3600, awaits US CPI for fresh impetus

GBP/USD recovers some ground above 1.3600 in the European session on Friday, though it lacks bullish conviction. The US Dollar remains supported amid a softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday.

Gold remains below $5,000 as US inflation report looms

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains in the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

The weekender: When software turns the blade on itself

Autonomous AI does not just threaten trucking companies and call centers. It challenges the cognitive toll booths that legacy software has charged for decades. This is not a forecast. No one truly knows the end state of AI.

Solana Price Forecast: Mixed market sentiment caps recovery

Solana (SOL) is trading at $79 as of Friday, following a correction of over 9% so far this week. On-chain and derivatives data indicates mixed sentiment among traders, further limiting the chances of a price recovery.