Gold Caught Between Fed Rates and Falling Oil Prices
The US Federal Reserve's interest rate policy is currently under scrutiny as markets assign a modest probability to another rate increase later this year. According to CME Group, investors are pricing in around a 35% probability of a July rate hike.
However, the latest data suggests that neither a hike nor a cut looks convincing. Lower oil prices have eased inflation concerns, while June's softer inflation reading indicates underlying price pressures are still moving in the right direction.
The labor market remains resilient, with unemployment relatively low and corporate earnings continuing to hold up. Inflation is still above the Fed's target, but the current policy stance of maintaining interest rates unchanged appears to be the most balanced option.
Gold remains under pressure, with the broader downtrend still intact despite several attempts to stabilize. Buyers have managed to lift prices off support, but the advance has lost momentum before reaching the descending trendline.