The gold market today is seen to be traded cautiously. Investors are looking forward to two important data reports that will be announced tonight, namely the "Consumer Price Index" and the "Fed Interest Rate Decision".
The dollar index is seen to have traded firmly while American treasury bonds are seen to be stable after the market has been auctioned firmly by $39 billion due to speculation and market sentiment at this point in time that the CPI data report tonight is capable of prompting the FED to implement an interest rate cut for this year.
We at Saracen Markets see that the FED is expected to cut interest rates this year by at least 25 basis points. However, at this FOMC meeting, the FED is expected to maintain the current interest rate.
The focus of investors and the market today should be focused on the "SEP Economic Projection" report that will be reported immediately after the announcement of American interest rates.
This data report is able to provide new indications to investors and the market about the direction of the FED in the future.
Market Impact
The CPI and FOMC reports today are able to provide a clear direction for the gold market.
For the CPI report, any increase in the inflation reading is able to strengthen the US Dollar while also being able to push the price of gold to a low level.
On the other hand, if the CPI report tonight is seen to decrease, it can provide support for the gold market.
However, the market's reaction to the CPI report tonight is seen to have a temporary impact.
As soon as the CPI report tonight is reported, gold market players are seen to reposition in preparation for the report and statement by the FOMC.
Market players now expect a 48% probability that the Fed will implement an interest rate cut of 25 basis points in September 2024.
Technical Analysis
Based on the daily chart, gold is seen to have been traded in a "hedging" manner since the beginning of this week. The price level of $2,300 is currently seen as the defining price level for the gold market.
If this price level is successfully broken, gold is seen to be able to trade lower at least until the price level of $2,250.
But if it's the other way around, the $2,350 price level will be the main obstacle for gold to continue trading high.
Any subsequent increase can push the price of gold to trade at least up to the level of $2,388.
