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Gold Inches Past $2,030 on Looming Economic Data, Delayed Fed Cuts

Gold Inches Past $2,030 on Looming Economic Data, Delayed Fed Cuts

Midweek Updates from FunderPro

Key Takeaways

  • Gold holds itself steady as rate cuts hang in the air
  • As geopolitical tensions grow, investors flock to a safe-haven in gold

Lying in Wait

Gold hugged the $2,030 level Wednesday morning, changing hands at $2,032/oz, while February gold futures rose 0.4% to $2,033/oz. The bullion has gained 1.28% in the last week, holding its spot in the green. The small but mighty fluctuation mirrors the market’s anticipation of potential rate cuts from the Federal Reserve and the keen interest in upcoming US economic data.

Investors have a barrage of economic data hanging over their heads this week. First up, heads are turning to the US flash PMI (Purchasing Managers Index) report, scheduled for later today. 

Calculated from surveys of purchasing managers across multiple industries, specifically the manufacturing and services sectors, the PMI acts as a key economic indicator and a gauge the Fed uses in its policy-setting decisions. A value above 50 indicates growth, whereas anything below 50 indicates contraction.

As the market absorbs the PMI data, the Personal Consumption Expenditure (PCE) data is coming in hot on its heels. Set for publishing by the Bureau of Economic Analysis on Friday, the PCE data serves as the Federal Reserve’s preferred gauge of inflation. 

The print offers insights into inflation across a range of consumer expenses and will reflect any changes in consumer behavior, such as replacing brand-name items for their own-brand counterparts. The markets’ expectation for Core PCE, which excludes food and energy, is an increase of 0.2% for the month.

Yieldless

As the inflation data unfolds, the prospects of an interest rate cut from the Fed look less and less likely, with expectations for any sort of rate relief being pushed back to later in the year. As a non-yielding asset, gold shines a little brighter for interested investors in the higher-for-longer landscape.

Coming away from US drivers, the yellow metal may be feeling support from ongoing geopolitical uncertainties. Holding onto its “safe-haven” status, gold has attracted investors looking for a hideout during times of elevated market uncertainty.

In a nutshell, be sure to watch the incoming data closely. The prints are sure to offer some clues into the health of the economy, which will in turn influence the Federal Reserve’s monetary policy decisions