Gold rises as Fed signals potential interest rate cuts gold markets rose in the early hours of Wednesday, finding strong support at the 50-day moving average at $2,343.27. The next challenge facing the market is to surpass last week’s high of $2392.97 to attract new buyers and new capital.
The cautious stance of the Fed Chairman Recent comments by Federal Reserve Chairman Jerome Powell have reinforced the issue of rate cuts. While maintaining a cautious approach, Powell acknowledged improved inflation data and stated that “more good data would strengthen” the argument in favor of a looser monetary policy. This stance has provided support to gold prices.
Traders currently expect a 73% probability of a rate cut in September, with another cut expected by December, gold’s non-yielding nature makes it more attractive in a low interest rate environment..
U.S. Treasury yields fell slightly on Wednesday after Powell warned of the potential negative impact of prolonged high interest rates on economic growth. The 10-year Treasury yield fell by two basis points to 4.275%, while the two-year Treasury yield remained relatively stable at 4.618.%. .
Investors are eagerly awaiting major economic releases, including the June Consumer Price Index (CPI) on Thursday and the Producer Price Index (PPI) on Friday. Gold market is likely to be positive overall and CPI data is expected to show headline prices up 0.1% m/m and core prices up 0.2%, with year-on-year increases of 3.1% and 3.4% respectively..
Gold markets await CPI and producer price index figures
The gold market looks likely to be positive overall, and I think the market at this point is waiting for the decisive CPI and PPI figures in the US.
Gold markets rose in the early hours of Wednesday as we continue to see the overall bullish pressure. Considering that the gold market rose directly in the first part of the year, there are a plethora of reasons to believe that gold will continue to rise.
The simple truth is that central banks around the world pay close attention to gold supplies and buy them. If we manage to reach the $2425 level, I think gold will start to start climbing towards the $2500 level. It is believed that the next two days could be important for gold as well, because the CPI and PPI numbers will give us an idea of what the Fed might do.
ETF Flows
The World Gold Council reported that financially backed global gold exchange-traded funds saw inflows for the second consecutive month in June, driven by additions to holdings in funds listed in Europe and Asia..
The outlook for gold looks bullish in the short term. With the Fed signaling a potential shift toward interest rate cuts and ongoing economic uncertainties, gold’s appeal as a safe-haven asset is likely to be strengthened. However, the market will be closely watching the upcoming CPI data, which could affect the Fed’s decision-making process and, consequently, gold prices in the near term..
Gold maintains its position above the 50-day moving average at $2,343.29, which acts as a key support. This level has held up for six consecutive trading sessions, demonstrating the presence of buyers..
Bill to use gold to support Naira and stabilize the economy
A bill proposing the Central Bank of Nigeria (CBN) to use gold to curb inflation and stabilize the Naira has passed its second reading in the Senate.
The People’s Democratic Party (PDP) senator representing Koji Central has proposed a “Gold Reserve Bill” to formalize the bank’s role in the gold industry. The bill proposes a series of policies that would define the bank as the buyer of all the gold produced in the country.
Establish a Gold Reserve Authority which will ensure the regular supply of gold to the Central Bank of Nigeria for the maintenance and management of Nigerian gold reserves.
The bill said the governor of Nigeria’s central bank would chair the gold reserve management committee. Part of the bill said the objectives of the Central Bank of Nigeria would be “to ensure the stability of the national economy by using gold reserves as a financial anchor, and to provide a secure basis for the value of the currency and the total value of the currency.”
economic health”. It also said CBN will manage Nigeria’s gold reserves to mitigate the risks of inflation and deflation, thereby contributing to the stability of currency values and price levels in the country.
Another goal, according to the bill, is for CBN to use “gold reserves to support the national currency and its stability in the foreign exchange market, ensuring a favorable position in international trade.”
In the draft, the legislator proposed that CBN ensure, at “all material times and from time to time,” that its external assets consisting of gold coins or bullion are at least 30 percent of its total assets.
External reserve. The draft law also seeks to exempt the import of machinery, machinery, equipment and accessories exclusively for gold mining operations from customs and import duties. The refined gold will be sold to the Central Bank of Nigeria to boost foreign reserves.
