Gold prices climb on renewed rate cut expectations; US inflation data in the spotlight

Gold prices rose on Wednesday, buoyed by recent comments from Fed Chair Powell that rekindled expectations of a rate cut after several delays in the start of policy easing.

Powell’s testimony on Tuesday hinted that the central bank remains on track for a rate cut, following recent weak US economic data, though policymakers remain cautious and require more evidence before finalizing their decision.

Market bets for a rate cut in September have increased to 75%, with growing expectations for another easing in December. However, the final decision lies with US policymakers, and Powell’s second day of testimony today, along with the release of the US June CPI report, will provide more insights into the timing of the Fed’s actions in the coming months.

Fresh strength in gold pushed prices to the upper side of a longer range, spanning between $2390 and $2290, with the psychological $2400 level now in focus.

Daily studies are bullish, but positive momentum is fading, with fundamentals likely to play a key role again.

US annualized inflation is expected to ease to 3.1% in June from 3.3% in May, while core inflation, excluding the most volatile components, is expected to remain unchanged at 3.4%.

Gold will benefit if consumer prices diverge from consensus to the downside, as such a scenario would move the Fed closer to the first rate cut and likely push the price above the $2400 pivot. Conversely, higher-than-expected June CPI numbers would dampen sentiment for the metal.

Res: 2392; 2400; 2433; 2450
Sup: 2362; 2351; 2341; 2319