Gold trading reminder: Gold prices rose slightly, traders wait for inflation data to take the pulse of the interest rate cut window

- On Tuesday (March 26), spot gold fluctuated in a narrow range at the beginning of the Asian market. It is currently trading around $2172.36/ounce. Gold prices rose 0.3% on Monday. Spot gold closed at $2171.58/ounce, driven by the Federal Reserve's expectation of interest rate cuts this year. Although traders are still waiting for this week's inflation data to confirm the timing of interest rate cuts.

                 (Gold bars and coins made of gold)

Weekly initial jobless claims will be released on Thursday and core personal consumption expenditure (PCE) price index data on Friday. Due to the Good Friday holiday, the market's reaction to the PCE data may not be seen until next week. Markets may be skewed towards volatility this week.

Bart Melek, head of commodity strategy at TD Securities, said gold could easily hit $2,300 or higher in the second quarter as freelance traders and exchange-traded fund (ETF) investors who have not really participated in the rally so far will enter the market once the rate cut is confirmed.

But stronger economic data could prompt gold to pull back, Melek said.

The dollar also gave up some of last week's gains, making gold cheaper for overseas buyers. But the rebound in U.S. Treasury yields has made gold bulls cautious.

Gold hit a record high last week after the Federal Reserve reiterated its view of three rate cuts in 2024. Traders now see a 70 per cent chance of a rate cut in June, compared with a 65 per cent chance before the Fed's March policy meeting last week. Interest rate cuts tend to make non-yielding gold more attractive. With Fed officials expected to deliver speeches this week, investment needs attention.

Federal Reserve policymakers said on Monday that they remained confident that U.S. inflation, particularly in housing prices, would ease, which is expected to help lower the overall pace of price increases, but also acknowledged growing caution around the debate.

"While housing services inflation remains quite high, the current low rate of new lease increases suggests that housing inflation will continue to decline," said Mr. Cook, the Fed governor, at an event at Harvard University.

Chicago Fed President John Goolsbee said in an interview that he was still surprised by the stickiness of housing inflation, but he also believes that this part of inflation will ease.

Mr. Goolsby noted that after a steady decline in 2023, progress toward a slowdown in headline inflation this year had slowed, and that "the main challenge is housing," a major component of the consumer spending basket that accounts for a large share of recent headline inflation data.

"We have to get housing inflation back closer to pre-pandemic levels," he said. "I do think market rents suggest further declines in housing inflation, but we haven't seen that in the headline data yet."

This trading day needs to focus on the monthly rate of durable goods orders in the United States in February, pay attention to the consumer confidence index data of the US Conference Board in March, and pay attention to the relevant news of the geopolitical situation. At 07:30 Beijing time, spot gold was reported at 2172.18 US dollars/ounce.