- Gold futures remain range bound due to risk-off sentiment and dollar’s recent strength.
- The Fed’s expected two rate cuts this year continue to raise demand for gold.
- Traders remain cautious ahead of key data ahead and FOMC meeting minutes.
Gold futures (GC) remain caught between macroeconomic and geopolitical developments, reflecting an indecision in the market. The bounce seen on Wednesday looks more like a technical pullback than a shift in sentiment.
Traders are cautious after Tuesday’s steep losses. The buying lacks noticeable conviction due to a confluence of mixed signals around the global landscape.
On the other hand, US trade-related uncertainties stemming from President Trump’s on-again, off-again threats and geopolitical risks keep a floor under gold prices. The recent delay in imposing tariffs on EU imports provided temporary relief to the markets. However, the underlying instability sustains. Potential sanctions by Trump on Russia and the boiling situation in the Middle East enhance gold’s safe haven status.
Meanwhile, the Federal Reserve is expected to pivot towards easing monetary policy in 2024. Markets now price in at least two rate cuts by the Fed in 2025, supporting the non-yielding precious metal.
Moreover, increased US fiscal concerns and rising national debt, along with debt servicing costs, provide gold a bullish undercurrent. A deliberate dollar devaluation could further strengthen the medium to long-term bullish case for gold.
However, the short-term view is restricted for gold futures as US dollar remained buoyed after Tuesday’s US Consumer Confidence data beat expectations, posting the biggest gain in the last four years. It shows a near-term resilience in the US economy, limiting gold’s appeal.
Looking ahead, traders are positioned to watch the FOMC meeting minutes due tonight. The minutes may reveal the Fed’s thinking on future monetary policy. The caution is compounded with coming up Q1 US GDP and PCE inflation data. Both events have a high potential to shake the markets and alter rate expectations.
The gold continues to draw strength from geopolitical instability and US fiscal worries. However, the resilient US economy and recent dollar strength could cap the gains. Until one of both sides decisively break, gold futures may remain range-bound with sentiment swinging on headlines and data surprises. But the long-term US debt burden and dollar devaluation are quietly stacking in favor of previous metal.
