Gold Held by the Fed, But Market Demand Increases
The outlook for gold remains bullish, with prices hovering near the $4,170 area on Friday despite a recovery in the US dollar. In the previous session, gold briefly broke above $4,200 before retreating to an intraday low. Selling pressure emerged after the chances of a Fed rate cut in December faded, with the market now pricing in only a 50% chance of a rate cut.
Several comments from Fed officials have led market participants to lower expectations for a rate cut later in the year. However, many investors still believe that weakening US economic momentum could eventually open the door for further monetary policy easing by the Fed.
Minneapolis Fed President Neel Kashkari highlighted the economic outlook as not entirely solid, while inflation remains high. Inflationary pressures and renewed concerns about the US economy limited gold price weakness, while the uncertainty weighed on the US dollar.
Conversely, the reopening of the federal government has raised fresh concerns about the already strained US fiscal situation. The market is now awaiting the release of delayed economic data, with expectations that these reports will show a weakening labor market and a slowing GDP growth rate.
Some projections even estimate that quarterly economic growth could decline by around 1.5% to 2%, in line with weakening labor market indicators. This increasingly fragile economic picture actually adds to gold's appeal as a safe haven asset amidst rising uncertainty.
Source: Newsmaker.id
