Home > Dynamic > Countdown to Federal...

Countdown to Federal Reserve interest rate cut, experts predict gold rebound is expected, remind investors to follow the trend

2024-03-15

246

The gold market saw some substantial selling pressure on Tuesday (March 12) as inflation data came in higher than expected; however, for investors who missed out on the initial rebound, this may be a sign of the future, according to one market strategist. A correction may be a short-lived buying opportunity.

Although rising consumer prices pose a risk to the Fed, the latest economic data has only a limited impact on market interest rate expectations. Christopher Vecchio, head of futures strategy and FX at Tastylive.com, said in a recent interview with Kitco News that the market still sees a more than 60% chance of a rate cut in June, which will continue to support higher gold price.

Vecchio offered a bullish outlook on gold as the precious metal retreated from last week's highs above $2,200 an ounce. He believes that April gold futures were last quoted at $2,160.70 an ounce.

Although gold still has room to fall further, Vecchio said it is difficult to be pessimistic about gold.

He noted that as stocks continue to trade in overextended territory, gold remains a reliable safe-haven asset.

He added that precious metals remain well-supported in an environment of geopolitical turmoil and economic uncertainty.

He also said that gold is well supported as the Federal Reserve seeks to start its expected easing cycle as early as possible.

"Gold seems to be anticipating that we're going to cut interest rates at some point, and more importantly, it's a great asset to have if the Fed disrupts something like they usually do at the end of a rate hike cycle," he said. . "Going forward, the trajectory of interest rates is downward. This was an important point in Powell's speech to Congress. Whether the first rate cuts are in May or June, they will come."

Vecchio said he expects June to be the likely start of a new easing cycle, as the Fed is running out of time before the November 2024 election.

“After June, the calendar gets shorter very quickly,” he said, adding that after the June 12 meeting, the Fed will make its next monetary policy decision on July 31 and September 18 in November. It comes after the election but does not give the central bank any flexibility if they need to take proactive measures to support any potential weakness in the economy.

"If the Fed doesn't cut interest rates in the first half of the year, they will only be able to make three rate cuts in the remaining three meetings of the year," he said.

As for how to invest in gold, Vecchio said he expects to spend the rest of the year by buying at lows. He added that he had no specific target for the precious metal.

"I don't think anyone should assign any specific upside target to this. The chart is clearly pointing to the upside. As a general rule, if things are moving from the bottom left to the top right of the screen, don't try to be a hero and predict the top," he said. Right now, the trend in gold is up, and until that trend stops, I have no reason to think this is a good place to go short. If there is a pullback, then buy the pullback.”

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

CM Trade

As a world leading financial trading platform, CMtrade Provides comprehensive one-stop trading services and opportunities for traders.

[Products]

The platform provides over 32 kinds of popular financial products such as forex, precious metals, crude oil, indices, cryptocurrencies and more.

[System]

2 top trading systems CM Trade MT4 / CM Trade APP, powerful and easy to operate

[Service]

Comprehensive market news, professional market analysis, 7*24 hours online customer service

[Advantage]

Low cost, high leverage, flexible one-stop all day two-way trading.

[Authority]

Licensed and strictly regulated by authorities. Traders deposits are independently kept by the bank. Fast deposit and withdrawal. Fair, efficient and transparent trading environment.

Free Access
Daily Trading Strategy Download Now

CM Trade Mobile Application

Economics Calendar

Countdown to Federal Reserve interest rate cut, experts predict gold rebound is expected, remind investors to follow the trend

Access to global trading markets anytime and anywhere