On Thursday, June 20, weaker-than-expected US data increased traders' confidence that the Federal Reserve will loosen policy at least twice in 2024. The rise in US Treasury yields supported the US dollar, and gold prices rose sharply by more than 1%. At the same time, as investors became increasingly concerned about escalating geopolitical risks on the world stage, the demand for safe-haven gold rebounded. Spot gold closed at $2359.93/ounce, up 1.36%. COMEX gold closed at $2344.2/ounce, up 1.14%; COMEX silver closed at $29.615/ounce, up 4.13%. #GoldClosing#
(Chart of Spot Gold Trend, Source: FX168)
[Market News Analysis]
The latest US economic data continues to show a slowing of economic growth, and investors expect the Federal Reserve to cut interest rates twice by 25 basis points. The US employment report was worse than expected, with initial jobless claims higher than expected.
Market disappointment with US housing data as building permits and new home construction slowed down.
Meanwhile, Minneapolis Fed President Neel Kashkari said that core inflation may take a year or two to fall to 2%. He added that the direction of interest rates will depend on economic conditions, and emphasized, "Despite significant economic growth, we are achieving deflation."
The rise in geopolitical risks has pushed gold prices up. As Israel threatens to attack Lebanon, tensions in the Middle East are escalating. Coupled with recent agreements signed by Russia and North Korea, this could add to the appeal of gold, which is currently trading close to a key resistance level. As global geopolitical threats rise again, global powers move their chess pieces on the global strategic chessboard, and gold continues to rise due to safe-haven demand.
CME's FedWatch tool shows a 58% chance of a 25 basis point rate cut in September, down from 62% a day ago. At the same time, the December 2024 fed funds futures contract indicates a 36 basis point rate cut by the Fed before the end of the year.
Independent trader and analyst Vladimir Zernov predicts that despite the US dollar strengthening and US Treasury yields rising, the gold market will still rise. Escalating geopolitical tensions have boosted demand for precious metals; if gold prices remain above $2350/ounce, they will fall to resistance at $2390-2400/ounce.