Gold: With a Week to Fed, High $1,900s Is the Game
One or two more? It’s a question traders across markets have been vexing over as the Federal Reserve enters the final week to its July 26 rate decision. The debate, of course, is whether next week’s highly anticipated quarter-point hike will be the last in the central bank’s current tightening cycle. If so, then celebrations galore for most risk assets. If not, the head-scratching on direction continues for traders, especially in gold.
Whatever the case, between now and next Wednesday, longs in bullion seem to have found a home in the high $1,900s, particularly after the 7-week highs attained in the previous session on the back of hard-fought wins against inflation by the central banks of Europe and Canada.
The European Central Bank signaled earlier this week that it could be ready to pause on rate hikes from September onward. In Canada, meanwhile, inflation dropped within the control range of the Bank of Canada for the first time since March 2021.
Thus, attention next week will be on not just what the Fed does but also says, given Chairman Jay Powell’s stance at his June news conference that the central bank might be in a position to do two more rate hikes before the year is out.
For what it’s worth, Powell also said last month that the Fed’s decisions will be data-driven, and all relevant data that matters — from the Consumer Price Index, or CPI, to monthly nonfarm payrolls — suggest U.S. inflation is easing.
Falling global bond yields were also prodding investors to move out of Treasuries and into better potential havens like gold as well as true risk assets such as oil and equities, said analysts.
If Powell says or — even remotely suggests — that the Fed is done for this year with hikes, gold longs will be off to the
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