- Gold price maintains its gains above $2,340 an ounce, extending its recovery from over a month low of $2,290 an ounce.
- This was touched on June 7th after the Federal Reserve kept the US federal funds rate unchanged as expected, resisting upward revisions to future interest rate expectations.
- Moreover, the FOMC dot plots indicated that members expect an average of just one 25-basis-point rate cut this year, with four members not expecting any cuts at all.
- Recently, gold price is hovering around $2,322 an ounce at the time of writing.
Meanwhile, policymakers have expressed less optimism about the decline in inflation in the US economy while growth expectations remain intact, adding to hawkish pressures. However, bullion prices held onto gains from a weaker-than-expected CPI reading earlier in the session. Unexpectedly, the US headline annual inflation fell to 3.3% in May, while the core measure fell more than expected to 3.4%, continuing the weak price data from April. Also, the dovish sentiment from other major central banks supported gold, with interest rate cuts from the European Central Bank and the Bank of Canada ahead of expected cuts from the Bank of England and the People’s Bank of China.
Another factor influencing the gold market:
The DXY dollar index pared some of its losses on Wednesday, trading around 104.5, after dipping to 104.2 earlier in the session as traders digested the latest FOMC decision. Policymakers kept the US federal funds rate steady as expected, but indicated only one rate cut this year, compared to three 25-basis-point cuts expected in March.
However, in 2025, the US Federal Reserve is forecasting four cuts, compared to three previously scheduled. Many investors were hoping for at least two rate cuts this year, especially after inflation slowed more than expected last month.
According to reliable trading platforms, US dollar fell across the board, but saw some of the biggest selling against the euro as political uncertainty in Europe eased after French President Macron said he would not resign regardless of the outcome of the upcoming election.
The yield on the US 10-year Treasury note remained down 15 basis points earlier in the session to hover below the 4.3% mark on Wednesday, even after the Federal Reserve indicated that it would cut interest rates only once this year. The Fed had left the federal funds rate unchanged at a range of 5.25% – 5.5%, as expected, but the dotted forecast showed a single rate cut of 25 basis points this year, compared to previous expectations of three cuts and four cuts in 2025, more than the previous three. The upbeat signals were accompanied by upward revisions to inflation, although today’s CPI reading suggests consumer prices moderated in May.
On the stock trading platforms, US stocks closed mixed on Wednesday after the Federal Reserve left the benchmark funds rate unchanged, as expected. Recently, the S&P 500 rose 0.8% and the Nasdaq Composite advanced 1.5%, both hitting new record highs, while the Dow Jones Industrial Average lost 35 points. Yesterday, the FOMC’s economic outlook summary indicated that FOMC members’ expectations averaged one 25 basis point rate cut this year, less than the two cuts currently expected by markets.
Furthermore, the hawkish revision came despite a weaker-than-expected US inflation report earlier in the day, with headline inflation unexpectedly falling and the core measure falling more than expected.
Tech stocks led the session, with sharp gains in Treasury bonds lifting credit-sensitive sectors while energy, consumer staples and utilities fell. Among the big companies, Apple added 2.8%, Nvidia gained 3.5% and Microsoft jumped 1.9%. In corporate news, Oracle surged 13.3% to an all-time high after announcing new cloud deals with Google and OpenAI.
Gold Price Forecast and Analysis Today:
According to the performance on the daily chart attached, gold is still in a downtrend supported by a move towards the $2,300 per ounce support level. With the announcement of a slowdown in global central bank gold buying, confidence in the upward trajectory has been shaken, but geopolitical tensions are still providing positive momentum for gold. Ultimately, we still prefer to buy gold from every downtrend and the closest support levels for gold currently are $2,285 and $2,270 respectively.
Ready to trade our Gold forecast? We’ve shortlisted the most trusted Gold brokers in the industry for you.