After the FOMC meeting that took place early this morning, gold was seen to have traded high following the "Dovish" statement issued by FED chairman Jerome Powell, stating that "we have made a mistake by maintaining high interest rates for a long period of time". .
In addition, the result of the interest rate projection report for the year 2024 shows that there is a probability that interest rate cuts will be made if the inflation rate in the country shows a downward "trend". The Fed is expected to cut as much as 75 basis points (bps) overall for the next year. Market sentiment is currently of the view that the interest rate cut will be done in early March 2024. In addition, the FED's projection report also states that inflation is expected to rise to 2.4%
Retail Sales Data & Initial Jobless Claims Tonight
The release of data as stated above will "test the confidence" of gold investors on market sentiment (March 2024 Interest Rate Cut) at present. Investors and the market will evaluate whether the release of the above data is able to impact the increase in inflation readings in the future. This is because Retail Sales is one of the main indicators of inflation in the country.
For readers' information, the European central bank (ECB) and the central bank of England (BOE) will announce the direction of interest rates earlier tonight. The market expects these two central banks to follow the same steps as the Fed has stated. And this is able to provide a boost to the price of gold to continue its rise. However, the BOE will most likely still maintain interest rates next year due to a different monetary policy compared to the Fed. And this can put pressure on the American Dollar currency.
Technical Analysis
As expected yesterday, gold is seen to have sought the highest price. Gold is seen to be able to jump up to the $2100 price level if the release of Retail Sales and Initial Jobless Claims data tonight is able to provide confidence in the sentiment at this point. $2050 will be seen as the current hurdle. However, if it's the other way around, gold can push back to the new level of $2012 and then to $1954.
