Following the release of recent macroeconomic data, the price of gold futures rose aided by the depreciation of the dollar. What to expect now?
Over the past two weeks, significant macroeconomic data has emerged that has caused major conceptual shifts. This has generated massive structural changes in the capital market. Changes in expectations regarding interest rates and inflation by the end of 2023 have had a direct impact on the price of currencies and commodities, affecting operators’ expectations in the short and long term.
The macroeconomic scenario is changing: what to expect now?
What caught the attention of analysts was the inflation figure, which showed a 12th consecutive decline in the U.S., according to the Bureau of Labor Statistics and a press release on Wednesday. Annual US inflation appears to have slowed to 3%, marking a notable decline from the 9.1% recorded in June 2022. Similarly, the core index CPI fell 4.8%. The Federal Reserve (Fed) has an inflation target of 2%, as measured by the PCE (Personal Consumption Expenditure Price Index), which reached 3% in May.
In summary, it appears that the market is considering keeping Fed interest rates unchanged. This is despite the fact that Chairman Jerome Powell suggested, during the last FOMC meeting, the possibility of two additional increases in 2023. This, combined with recent statements by Fed officials, has had a negative impact on the dollar’s value against currencies included in the DXY (Dollar Index) index. The attraction of the weaker dollar and the approaching high in Fed Funds favored buying gold, whose futures market has seen notable gains in the last two trading sessions.
Does the gold chart shift back to bullish?
From a technical point of view, the latest developments have influenced the performance of gold futures: the price has again touched the moving average 50 days on a daily chart, probably thanks to the relative weakening of the US dollar. All-time highs stood at around $2080, and according to many, the new economic backdrop in the US could create volatility for the precious metal. An additional boost could come from an increase in the probability of recession in the country, such as a reduction in company margins in the release of second quarter results or an increase in unemployment even outside companies operating in the financial and technology sector.
Investing in CFDs does not involve the physical acquisition of gold, but only speculation on the price trend. This results in gains proportional to the extent of gold price fluctuation.
Original article published on Money.it Italy 2023-07-13 12:47:03. Original title: Analisi Oro, pronto per una ripartenza con la debolezza del dollaro?
