Fed minutes revealed caution about lowering rates too quickly
Today, market participants were able to gain more insight into the inner thinking of the Federal Reserve officials through the release of the minutes from last month’s FOMC meeting. The document revealed that they changed the wording in the post-meeting statement to indicate that no cuts would be coming until Fed officials held “greater confidence” that inflation was receding.
Investors wait for Fed minutes as gold rises for fourth consecutive day
According to a poll of economists conducted by Reuters, the Federal Reserve will likely initiate its first interest rate cut in June. This aligns loosely with the CME’s FedWatch tool, which predicts only an 8.5% probability of the first rate cut occurring in March, a 34.9% in May, and a 77.25% probability of lower rates in place by June.
Investor’s reaction to Consumer Price Index data was extremely short-sighted
U.S. Treasury Secretary Janet Yellen was very vocal about how Americans did not properly focus on the big picture as it pertains to yesterday’s CPI report.While acknowledging that the data revealed yesterday that inflation was fractionally higher than expectations, she believes that the real focus should have been on the big picture.In other words, market participants should have been focused on the fact that longerterm data reveals the decline in inflationary pressures is extensive, sustainable, and clearly on a path to the Fed’s 2% target.
Gold declines sharply as higher-than-expected CPI leads to dollar strength
Today the U.S. Bureau of Labor Statistics released the consumer price index report for January.“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January on a seasonally adjusted basis, after rising 0.2 percent in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.1 percent before seasonal adjustment”.
S&P 500 moves above 5000, attracting investor capital while reducing gold’s allure
S&P 500 moves above 5000, attracting investor capital while reducing gold’s allureYesterday the Standard & Poor’s 500 index hit a new milestone trading above 5000 points for the first time in history. Equity traders witnessed another record today with the S&P 500 closing out the week above 5000. Optimism regarding a revision of the December inflation data revealed that inflationary pressures are even lower than the earlier data suggested.
Gold drifts lower as fewer jobless claims suggests continued economic strength
For the first time in three weeks, applications for unemployment benefits have declined. This implies that corporations are steadily maintaining their current employees. From this, one can infer that economic strength continues to persist. The Labor Department reported that US jobless claims decreased by 9,000 applications, resulting in only 218,000 new applicants applying during the week ending on February 3. This came in slightly below the median forecast, which anticipated that 220,000 new applications would be filed, according to a Bloomberg survey of economists.
Investors yearn for insight into the Fed's upcoming monetary pivot
For the first time since March 2022 the Federal Reserve spoke of an upcoming pivot from its former highly restrictive monetary policy based upon aggressive rate hikes, to an accommodating stance based upon rate cuts. Federal Reserve officials have been open and transparent in communicating that the time to reverse its course and lower its benchmark rates is approaching. However, they have not presented any concrete timeline or, at a minimum, when it will initiate the first rate cut.
Gold rises as a result of dollar weakness and market participants actively buying
Gold futures basis, the most active April contract (GC J24) gained $9.10 or 0.45% as of 4:40 PM ET. Dollar weakness contributed approximately half of today’s gains, with the dollar index (USDX) declining by 0.24%, with the remaining 0.20% directly attributable to investors bidding the precious yellow metal higher. Exchange volume was rather subdued today, with daily volume falling well below the monthly average.
Federal Reserve monetary tightening creates an unusual paradigm shift
Economically speaking, we live in a very unusual time in the way economists interpret economic data. Reports that reveal solid economic advancements in the past have been interpreted in a positive light as they suggest economic growth and prosperity.
Gold rebounds following release of the weekly jobless claims report
The U.S. Department of Labor released its weekly jobless claims report at 8:30 AM EST, revealing that jobless claims rose to a two-month high. Jobless claims rose by 9,000, resulting in a total of 224,000 individuals that applied for unemployment benefits, while continuing claims increased by 70,000 to 1.898 million.
Powell crushes investor optimism regarding March interest rate cut
Today the Federal Reserve concluded its first open market committee meeting of the year. Three important takeaways were revealed in both the written Fed statement and comments made by Chairman Powell at the following press conference.
Investors await Federal Reserve’s decision on Wednesday
While it is a widely accepted assumption that the Federal Reserve has completed its rate hike cycle, the Fed has been very close to the chest regarding when it will initiate its first rate cut. It is almost a certainty that it will not occur tomorrow.
Dollar and gold futures drop as investors wait for two economic reports
Both the dollar and gold dropped today as investors and traders wait for two important economic reports later this week. Tomorrow’s first reading of U.S. GDP for the final quarter (Q4) of last year, and Friday's PCE report for December.
Gold banked gains yesterday and today, but still closed lower on the week
Gold futures closed out the week with modest daily gains. As of 4:15 PM ET, the most active February futures contract is up $10 (0.49%) and fixed at $2031.60. Gold futures opened at $2027.40, traded to a high of $2044.90, and a low of $2022.20. The sharp declines on Tuesday and Wednesday resulted in a weekly decline. Trading activity over those two days resulted in a drop of $44.80.
Gold gains as Investors realign focus from the Fed to the Middle East conflict
Gold futures hit an intraday low of $2004.60 yesterday and closed just off of that low at$2006.50. The $23 decline was largely in response to the retail sales report whichrevealed that consumer sales rose by 0.6% month over month in December. This wouldbe the second consecutive day of strong price declines in gold.
Retail sales report strengthens the Feds resolve to slower the pace of cuts
The United States Census Bureau released the advanced monthly sales report for December today, revealing that US retail sales rose 0.6% month over month in December 2023. The actual numbers came in line with economists’ forecasts that were predicting a 0.4% growth last month.
Gold reacts as a safe haven as middle-east conflict widens on US/UK air strikes
The United States and Britain launched airstrikes across Yemen beginning yesterday, attacking 16 locations, and striking 60 military targets in an attempt to stifle more drone attacks on merchant ships. Recently, there have been multiple unsuccessful drone attacks that have targeted merchant ships in the southern Red Sea by Yemen’s Houthis, an Iranian-backed military group.These combined actions magnify the fear that the war in Israel is spreading to a much larger Middle East conflict involving multiple Iranian-backed military proxies.