Gold Holds Near Monthly Low, Market Awaits Central Bank Signals
Gold prices (XAU/USD) moved within a narrow range on Tuesday (March 17), with market participants tending to hold large positions ahead of a busy week of major central bank monetary policy decisions. XAU/USD traded around US$5,020 and held near a one-month low, while a weaker US dollar and falling Treasury yields helped contain downward pressure.
Market focus now turns to the decisions of the Fed, ECB, Bank of England, Bank of Japan, Bank of China, and SNB. Although interest rates are widely expected to remain unchanged, the primary focus is on forward guidance and central banks' assessments of future policy paths, especially after high oil prices due to the US-Iran war re-emerged the risk of inflationary pressures.
Concerns about energy inflation reinforce the view that interest rate easing could be delayed, thus limiting the upside potential for gold as a non-yielding asset. The market is now pricing in only around 25 basis points of Fed cuts by the end of the year, down from previous expectations of over 50 basis points.
According to CME FedWatch, the Fed is expected to keep interest rates on hold through April, June, and July, with September being the most likely timing for a cut, with a probability of around 50.8%. In the near term, gold's direction will be largely determined by central bank signals regarding energy inflation, dollar movements, and changes in real yields.
Source: Newsmaker.id
