Gold trading reminder: Gold prices rose after two consecutive declines, is this the end of the high correction? Focus on the Federal Reserve's decision

Gold prices recovered after falling to a one-week low on Monday, as investors awaited a series of central bank meetings this week, includingFederal ReserveThree policy decisions to look for clues on inflation and interest rates.Spot goldReceiving 2160.15dollar/Ounce, up about 0.2%; it hit its lowest level since March 7 at the beginning of the session.

Depu CapitaldooprimeSenior market strategist Daniel Pavilonis said: "The gold market is looking forward to Wednesday's interest rate decision, but it could also beBank of JapanTuesday's rate decision could also be a sign that global inflation is rising, and clearly gold is a global inflation hedge. "

The data shows that,United StatesConsumer prices rose solidly in February, and producer prices rose more than expected, indicating that inflation is somewhat sticky. Gold prices fell by about 1% last week.

                                      (Spot gold trend chart)

Although gold has traditionally been considered an inflation hedge, the practice of raising interest rates to curb rising prices has discouraged investment in gold because it does not pay interest.

The Bank of Japan is expected to withdraw from its ultra-dovish monetary policy at a two-day meeting that ends on Tuesday. The Bank of England meets on Thursday and is expected to leave interest rates unchanged.

Markets also widely expect interest rates to remain unchanged at the Federal Reserve's two-day policy meeting, which ends Wednesday, but there is a 55.2% chance of a rate cut in June.

[Market News Analysis]

Previous speculation that the Federal Reserve would begin easing monetary policy earlier than expected remains supportiveGold priceHowever, last week, gold prices plunged nearly 1% as U.S. consumer and producer inflation unexpectedly accelerated, spurring a surge in Treasury yieldsDollar indexThe dollar rose by more than 0.69% last week, while gold fell.

The U.S. Economic Conference will focus on housing data for the first two days of the week. Data from the National Association of Home Builders (NAHB) showed that confidence among home builders rose to its highest level since July 2023 in March in anticipation that the Federal Reserve might start easing policy as mortgage rates fell. The NAHB Market Index was 51, up from 48 in February.

Edgar Walk, chief economist at asset manager Metzler, said in the report that the market is struggling to interpret U.S. economic data, so the probability of a rate cut in June is only 55%. The data contradicts itself, with the labor market significantly weaker in February, while inflation is accelerating. "Whether a rate cut will occur in June will also depend on the residential real estate market, which has tended to be a leading indicator of the broader economy in the past due to its high sensitivity to interest rates," he said. The agency expects the Federal Reserve to cut rates in June and three 25-basis point cuts in 2024.

The 10-year Treasury yield climbed two and a half basis points to 4.334 per cent.

The latest data on the US economy showed mixed data on business activity, making it difficult to predict the pace of the slowdown. Although the economy added more people to the workforce than expected, fewer people filed for unemployment benefits and the labour market has shown signs of cooling.

Against this backdrop, Federal Reserve Chairperson Jerome Powell's remarks in testimony to the US Congress that he would start cutting borrowing costs made sense. However, last week's inflation data and retail sales data triggered a repricing of the Fed's interest rate cut bet, in line with the Fed's view of easing by 75 basis points by the end of 2024.

The Federal Reserve's meeting this week is scheduled for March 19-20. Given the latest inflation data, speculation is growing that Fed officials could undo a rate cut before the end of the year, suggesting they could cut rates twice in 2024.

U.S. markets are digesting a positive macro backdrop as inflation cools, BlackRock strategists said. They don't think bullish risk appetite will be "seriously challenged" in the coming months. The investment team, which includes Jean Boivin and Wei Li, remains bullish on U.S. and Japanese equities, noting in their market commentary that the market believes inflation will cool enough for the Federal Reserve to cut interest rates three times this year by 25 basis points and continue to do so. "We think optimism will persist as inflation continues to decline. That's why we continue to be bullishUS stocks, and focus on the topic of artificial intelligence, because technology drives corporate earnings growth. "