- The Gold price rebounds to $2,170 as yields on US Treasury bonds decline slightly. The broader appeal of Gold remains uncertain as investors reassess expectations for Federal Reserve rate cuts in the June policy meeting after the February US PPI report indicated that producers hike prices of goods and services at a higher pace than anticipated.
- Market expectations for Fed rate cuts in June have dented as hot PPI data has indicated that Fed policymakers need not rush to reduce interest rates. According to the CME FedWatch tool, the chances for a rate cut have come down to 59% from 74% a week ago.
- This week, the consumer price index (CPI) data also showed inflation remains sticky. Stubborn price pressures have cast doubts over Fed Chair Jerome Powell’s commentary in his Congressional testimony that the central bank is not far from gaining confidence that inflation will return to the desired rate of 2%.
- Apart from the US PPI, the US Census Bureau reported that Retail Sales in February rebounded less than expected. The Retail Sales rose 0.6% while investors anticipated a 0.8% growth. In January, sales contracted by 1.1%, downwardly revised from the 0.8% decline previously estimated.
- Meanwhile, investors are shifting focus to the Fed’s interest rate decision, which will be announced on Wednesday. The Fed is widely anticipated to keep interest rates unchanged in the range of 5.25%-5.50%. The central bank will also release economic forecasts and the dot plot, which will indicate Fed officials’ expectations for interest rates over time.
- Before that, the preliminary Michigan Consumer Sentiment Index will be in focus, which will be published at 14.00 GMT. Sentiment is forecasted to have remained steady at 76.9. The data indicates individuals' perceptions of economic prospects. Upbeat figures tend to signal high consumer spending, faster economic growth, and a strong labor market while declining numbers generally indicate that individuals’ confidence in economic prospects is fading.
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