Gold prices rose on expectations of a Federal Reserve interest rate cut. Lower-than-expected inflation data supports a possible interest rate cut. Strong demand from China supports gold’s outlook.
Interest rate cut expectations increase gold prices
Gold prices are preparing for their second consecutive weekly gain as expectations that the Fed will cut interest rates increase. cryptokoin.comAs you follow from , US consumer prices increased less than expected in April. Thus, it strengthened hopes that an interest rate cut would be made in September due to the downward trend in inflation. Retail sales data, which showed no growth in April, indicate that domestic demand has cooled, further supporting the possibility of monetary easing.
The US consumer price index (CPI) increased by 0.3% in April. Thus, it remained behind the 0.4% increase in the previous two months. This development indicated that inflationary pressures were potentially easing. The annual CPI increase was 3.4%, slightly below the 3.5% increase in March. In particular, housing and gasoline costs contributed significantly to the CPI increase, while food prices remained unchanged. Core CPI, excluding food and energy, also increased by 0.3%. This reflected ongoing inflation in sectors such as healthcare and personal care.
The impact of economic indicators on market confidence
The market’s expectation of an interest rate cut has increased. A 73% probability was priced for September, which was 69% before the latest data. The Fed’s decision to leave its benchmark interest rate steady in its current range of 5.25%-5.50% underscores the cautious approach amid mixed economic signals. Analysts expect inflation to gradually move towards the Fed’s 2% target, especially as the labor market shows signs of cooling.
On the demand side, strong retail demand in China and efforts to stabilize the real estate sector supported gold prices. However, central bank purchases, especially the People’s Bank of China, slowed down in April, when gold prices reached a record high. Supply-side factors, such as gold prices rising 15% since the beginning of 2024, have kept profit margins healthy for gold miners despite rising operating costs.
gold prices tprediction: Bulls are stronger!
Market analyst James Hyerczyk evaluates the technical outlook for gold. Gold prices are expected to continue their upward trend in the near term due to favorable conditions for interest rate cuts and continued demand from key markets such as China. Inflation concerns continue. However, the possibility of monetary easing provides a bullish outlook for gold. Additionally, prices are likely to remain high as traders await further action from the central bank.
Gold prices started to rise on Friday. It has now found immediate support from a short-term pivot at $2,354.47. The intermediate uptrend is controlled by the 50-day moving average of $2,288.35. This is followed by short-term bottom support at $2,277.34. If the current upside momentum continues, look for a rise through the minor resistance at $2,397.52. The first important targets on the upside are the minor top at $2,497.12 and the major top at $2,431.59.
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