Gold trading reminder: The Federal Reserve may delay interest rate cuts, focusing on three bearish effects

Daocheng Technology Financial News -Gold priceLast Friday (April 5) climbed, the highest hit $2330.96/ounce, once again a record high, although the United States in March employment growth is strong, but including the United States interest rate cuts bets, speculative buying and central bank purchases, including multiple factors to make gold prices even record highs, geopolitical turmoilGold investmentThis provides strong upward momentum.

Monday (April 8) Asian early trading, spot gold fell slightly, currently trading at $2310.49/ounce near the Russian-Ukrainian conflict and the situation in the Middle East caused by concerns slightly subsided, and the Federal Reserve officials hawkish speech slightly suppressed the Federal Reserve in June interest rate cut expectations, so that gold bulls have retreated.

                            (One-hour chart of gold prices)

For last week's rally,Daocheng Technology FinanceChief market strategist Phillip Streerial said there were too many inflows and everyone was chasing higher, which, along with strong central bank buying and speculative buying, helped gold prices.

For this week, the market will usher in the US CPI data and Federal Reserve meeting notes, as well as the New Zealand Federal Reserve, the Bank of Canada and the European Central Bank interest rate decisions, investors need to pay attention.

According to the survey, a total of 12 Wall Street analysts participated in the Kitco News gold survey last week. The survey results show that bullish sentiment has fully captured the imagination of institutions. Of these, nine experts (75%) expect gold prices to continue to rise in the coming week, while only one analyst (8%) predicts that gold prices will fall. The remaining two experts (17%) believe that the headwinds and tailwinds of the market are similar in the coming week, so they cannot make a clear judgment.

Meanwhile, a total of 240 retail investors participated in Kitco's online poll. Of these, 75% expect gold prices to rise further or remain sideways. Specifically, 159 retail traders (65%) expect gold prices to rise in the coming week. Separately, 41 respondents (17%) expect gold prices to fall, while 40 respondents (17%) are neutral on the near-term outlook for gold.

Considering that the geopolitical situation generally has a relatively short-lived impact on gold prices, and the US economic data is relatively strong, the Federal Reserve's interest rate cut expectations in June have cooled down, and after the oil price continues to rise, the US inflation growth rate has shown signs of picking up, and the Federal Reserve officials have made hawkish speeches. This week, gold prices may rise and fall or be adjusted by high volatility.

Two Fed officials warned of "upside" risks to inflation, downplaying urgency of rate cuts

Two more Federal Reserve officials played down the urgency of a rate cut on Friday as data showed sticky inflation, with one warning that failure to ease price pressures further could even prompt the central bank to raise interest rates further.

In remarks prepared for the Shadow Open Market Committee meeting in New York, Mr. Bowman, the Fed governor, said that while inflation had cooled and was likely to continue to fall towards the 2 per cent target, "we are not yet at a point where it is appropriate to lower policy rates and I still see some upside risks to inflation".

These inflationary potentials could alter the outlook for future policy decisions, she said. "While this is not my baseline forecast, I still believe we may need to raise policy rates further at future meetings if inflation progress stalls or even reverses," she said.

The U.S. job growth in March far exceeded expectations and the unemployment rate fell, which may prompt the Federal Reserve to delay interest rate cuts

U.S. job growth in March far exceeded expectations and wages rose steadily, suggesting solid economic performance at the end of Quarter 1 and potentially prompting the Federal Reserve to delay interest rate cuts expected to begin this year.

The Labor Department's closely watched jobs report on Friday also showed that the unemployment rate fell to 3.8 percent in March from 3.9 percent in February. The drop in the unemployment rate reflected a sharp rebound in household employment, with the economy easily absorbing 469,000 new workers.

The US unemployment rate has remained below 4 per cent for 26 straight months, the longest since the late 1960s. The US economy is by far the world's leader, despite the Federal Reserve raising interest rates by 525 basis points since March 2022 to curb inflation. The labour market has benefited from an increase in immigration over the past year.

Although strong hiring activity has not changed expectations that the Federal Reserve will begin easing policy this year amid an increase in labor supply, financial marekts expressed skepticism about the three rate cuts expected by policymakers.

Michael Feroli, chief US economist at JPMorgan Chase, said: "While the favourable developments on the supply side are in line with [Fed chairperson] Powell's benign outlook, there are clearly no cracks on the demand side, which should reduce the urgency of easing, with us pushing back our forecast for the Fed's first rate cut from June to July."

Inflation data to be released this week will be crucial in determining the timing of the first rate cut. Since July last year, the Federal Reserve has maintained its target range for policy rates at 5.25% -5.50%. Following the release of the jobs report, according to data from the London Stock Exchange Group (LSEG), financial marekt believes that interest rates will be cut twice this year.

Forecasts for quarter-on-quarter gross domestic product growth in the US are as high as 2.5 per cent. The economy expanded 3.4 per cent in the fourth quarter.

Lydia Boussour, senior economist at Ernest & Young, said: "While we... think the Fed could cut rates three times this year, reports like this could tilt some policymakers towards trimming expectations for the number of rate cuts in 2024."

Institutional analyst Richard Snow said gold prices had been strengthening last week despite rising US Treasury yields. The recent escalation in the Middle East has made gold more attractive because of its safe-haven nature. But the market has returned to massively overbought territory, meaning there could be a cooling period early this week without further escalation.

At 07:09 Beijing time, spot gold was quoted at 2313.71 US dollars per ounce.