Daily Gold Market Report

Fed Chair Powell Signals Caution:
No Immediate Rate Cuts Despite Inflation Ease

(USAGOLD – 2/01/2024) Gold prices have dipped slightly in Thursday’s early trading session, following outcomes from the recent Federal Reserve’s FOMC meeting, which leaned towards a more hawkish stance on U.S. monetary policy. Gold is trading at $2049.71, up $10.19. Silver is trading at $22.94, down 2 cents. The Federal Reserve decided to maintain the current interest rate range and signaled a cautious approach towards future rate cuts at thier policy meeting yesterday. Jerome Powell emphasized the need for more data to confirm a sustained downward trend in inflation before considering a rate reduction, particularly ruling out a cut in March. Despite a favorable pullback in inflation and a still-solid economy, Powell and the Federal Open Market Committee (FOMC) showed reluctance to quickly lower rates. The FOMC unanimously voted to keep the benchmark rate at a 22-year high of 5.25%-5.5% for the fourth consecutive meeting, removing a previous reference to further policy “firming”. Market expectations for a March rate cut decreased following Powell’s comments, affecting the S&P 500 and Treasury yields. Powell also addressed concerns about premature rate cuts and reiterated the Fed’s commitment to a gradual approach, waiting for clearer signs of inflation moving sustainably toward the 2% target. The article also notes concerns about an upcoming revision to inflation figures and the Fed’s ongoing asset portfolio reduction. Powell indicated that discussions about the balance sheet would begin in March, with decisions expected by mid-year.

USAGOLD Comment: Gold prices briefly shot up to $2050/oz during the meeting but have since faded. Gold is suspected to remain rangebound until the Fed ultimately decides to cut rates.