Gold prices edged back up to $2,600 early Wednesday, continuing a modest recovery seen in Asian trading on Tuesday. This rebound follows a three-day losing streak that brought the metal to a two-month low of $2,590 on Tuesday.
The recent gains in gold come as traders close out short positions in the metal and reduce long positions on the US dollar. This trend follows Republican Donald Trump’s recent US presidential election win, with his proposed lower tax and foreign trade policies seen as potentially inflationary. The USD has been strengthening, partly due to rising US Treasury yields, which have put pressure on non-yielding assets like gold.
Trump wins election 2024
Markets are also speculating that Trump’s anticipated policies may slow down the US Federal Reserve’s current easing cycle, benefiting the US dollar further. Currently, traders estimate a 60% probability of a 25-basis-point rate cut by the Fed in December, a decrease from 84% just a month ago, according to the CME Group’s FedWatch Tool.
Attention now turns to the upcoming release of the US Consumer Price Index (CPI) data, expected later on Wednesday. Economists forecast the annual headline and core CPI to rise by 2.6% and 3.3% respectively for October, while monthly CPI figures are expected to remain steady. A lower-than-expected CPI could reinforce expectations of continued rate cuts, while a higher reading could spark speculation that the Fed may pause its cuts.
Up coming Economic Calendar on 13 November 2024
Any initial market reaction to the CPI is likely to be short-lived, as investors await Fed Chair Jerome Powell’s upcoming speech on global economic perspectives, scheduled for Thursday. Additionally, statements from several Fed policymakers, including Minneapolis Fed President Neel Kashkari, Dallas Fed President Lorie Logan, Kansas City Fed President Jeffrey Schmid, and St. Louis Fed President Alberto Musalem, are also expected to provide insight into future monetary policy.
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