The financial markets experienced significant volatility on Friday due to weaker-than-expected US data and Federal Reserve speeches, leaving uncertainty about the upcoming rate decision. Will the Fed cut rates by 25 or 50 basis points on September 18?
This week’s US data releases may provide more clarity. Despite short-term fluctuations, gold is expected to remain supported on dips, as it has outperformed other assets this year. Several factors are driving gold’s strength, including expectations of rate cuts, safe-haven demand, and increased central bank purchases.
Gold Price Analysis
While a short-term pullback is possible, gold prices have remained steady around the $2500 mark, indicating a bullish trend. The metal has been trading near its all-time high from August, with key support levels at $2470-$2485. Upside targets include $2531 and $2600.
US Dollar Outlook
Following a weak US jobs report, the dollar initially dropped but has since stabilized. Uncertainty over the Fed’s rate cut decision has led to mixed reactions in the currency markets. This week’s CPI data could be a deciding factor for the dollar’s direction.
Fed’s Rate Cut Decision
After disappointing jobs data, the Fed is expected to cut rates on September 18. The market is divided on the scale of the cut, with the Fed aiming to avoid major market disruptions. US CPI data will play a crucial role in the Fed’s decision-making process.
US CPI Expectations
US inflation is expected to cool to 2.6%, aligning with the Fed’s target. Powell has signaled support for a rate cut, pending CPI data. Any deviation from the expected figure could impact the Fed’s decision on the rate cut magnitude.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should evaluate risks before making any investment decisions.
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