Market trading was light on Monday, and gold fell slightly in volatile trading. Gold opened at 1928.14 that day and closed at 1922.51. Investors set their sights on a further slowdown in the pace of rate hikes at the U.S. Federal Reserve’s policy meeting later this week.
The market news on Monday was relatively flat, and the economic data released last Friday still affected the market. In addition to the release of December consumer spending in the United States last Friday, a survey released by the University of Michigan showed that consumers’ one-year inflation expectations fell in January. To a 21-month low of 3.9%, which highlights the improvement in inflation; the above data are conducive to the Fed’s expectation of slowing rate hikes, which is positive for gold, but due to the lack of news on Monday, investors are biased ahead of important events Cautious, no big bets, some bullish profit taking made gold fall back slightly. The Fed raised its policy rate target range by 425 basis points last year, from near zero to 4.25%-4.50%, the highest level since late 2007, at its Jan. 31-Feb. 1 meeting, It is widely expected to announce a 25 basis point rate hike, which would bring the policy rate range to 4.5%-4.75%. However, the market is likely to have digested the expectation that the Fed will raise interest rates by 25 basis points at this meeting.
In fact, since November 2022, this wave of unilateral rise in gold has mainly benefited from speculation that the Fed will slow down interest rate hikes. With a series of data and the inertia of market sentiment, gold has generally maintained a strong momentum. But on the one hand, as the price of gold is gradually approaching historical highs, if there is no major positive stimulus, more profit-making selling by bulls will emerge, and the upward selling pressure will become heavier; on the other hand, this factor has been hyped for a while. If this wave of good news is digested and the good news is exhausted, there will be pressure to pull back in the market outlook, so we must beware of gold’s pullback in the general direction in the medium term. In the short term, before the interest rate meeting, the chances of gold fluctuating and stabilizing are higher.
Guo Yufeng, Bank of China Guangdong Branch
Opinions are personal and do not represent those of the organization