Gold Performance:
Spot gold fell 2.19% to $2,587 following the US Federal Reserve’s hawkish pause in its monetary policy decision. MCX Gold contract is at Rs 75,626, down 1.34 percent.
Central Bank Watch:
The US Central Bank cut the Fed Fund rate by 25 basis points to 4.25-4.50 percent, signaling a temporary pause in its rate cut spree. The FOMC revised core PCE inflation to 2.8%, 2.5%, and 2.2% in 2024, 2025, and 2026, with revised GDP growth rates and unemployment rates. The Bank of Japan kept the benchmark rate unchanged, while the Bank of England paused and is expected to cut rates in 2025.
Data roundup:
US GDP Q3 revised higher to 3.1%, with the PCE price index beating the forecast. Initial jobless and continuing claims dip from prior readings.
US yields and the Dollar Index:
US yields surged past psychological resistance, reaching 4.58 percent and 4.46%, respectively, on November 19, reaching their highest level since November 25, while the US Dollar Index reached a two-year high of 108.46 following hawkish FOMC and GDP data.
Upcoming Data:
Markets are closely monitoring the release of the US PCE deflator inflation data, which is the Fed’s preferred indicator of inflation.
ETF:
Global gold ETF holdings reached 82.69M as of November 18, the lowest level since February, down 1.7% from the cycle peak of 84.14MOz on October 23.
Outlook:
The US Federal Reserve’s shift from employment to inflation control may lead to fewer rate cuts, bolstering the economy’s growth. The US Dollar Index and yields are expected to rise further.
The Fed’s projections are based on recent data, including employment, inflation, and GDP growth, and may change with upcoming data. Gold is likely to be under pressure unless geopolitical tensions weaken. Resistance is at $2630/$2650/$2670, and interim support is at $2581/$2550/$74,400.
, a cycle-low from November 14, with resistance at $2630 (Rs 76,700)......){kind=link}