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January 16, the minutes of the European Central Banks December meeting released on Thursday showed that policymakers concluded last month that the European Central Bank needs to cut interest rates cautiously and gradually, but further easing may be possible in the future. The ECB cut interest rates for the third time in a row last month and said that it would further ease policy in view of the slowdown in inflation, but the timing and speed of the rate cuts remain to be discussed. The minutes of the ECB meeting pointed out that "given the current uncertainty, this cautious approach is still reasonable, but if the benchmark forecast for inflation in the coming months and quarters is confirmed, it is considered appropriate to gradually relax policy restrictions." With almost no economic growth at present, the ECBs focus has shifted from excessive price growth to weak economic activity, and more and more policymakers now advocate that interest rates should at least be lowered to a level that no longer hinders economic growth. The central bank will hold its next meeting on January 30, and investors have fully digested its expectations of another 25 basis point cut. The benchmark interest rate is expected to fall further to 2% by the end of 2025.Ukrainian President Zelensky: Britain will provide Ukraine with $3 billion from frozen Russian assets.ECB meeting minutes: Medium-term inflation risks are more inclined to the downside.Bank of America (BAC.N) CFO: Despite the uncertain interest rate outlook, deposits still show potential growth in the coming months.Bank of America (BAC.N) Chief Financial Officer: The banks operating income has reached its highest level in more than a decade.

Gold Price Prediction: XAU/USD fluctuates within the $30 level as FOMC Minutes approach

Daniel Rogers

Feb 22, 2023 15:16

Gold price (XAU/USD) tests a two-day downturn as it floats around $1,835 at the start of Wednesday. As traders anticipate the Federal Open Market Committee's (FOMC) Monetary Policy Meeting Minutes, the precious metal maintains its trading range of approximately $30.00 from the previous week. Notably, geopolitical concerns and the US Dollar's weak movements around the multi-day peak appear to act as filters for XAU/USD traders.

 

In spite of this, stronger preliminary US S&P Global PMIs for February and hawkish Fed bets supported the US Dollar Index's first daily gain in three days, with the index closing down 0.07% intraday near 104.11 at the latest.

 

However, the weak movements of US Treasury bond yields near the three-month high reached the day before appear to have stifled the XAU/momentum USD's of late.

 

The hawkish bias around the US Federal Reserve (Fed) and rumors of an impending policy flip may also test Gold traders.

 

In addition, comments by US Secretary of State Antony Blinken and Russian President Vladimir Putin have an impact on market mood and the price of gold, as both imply an escalation of tensions between Moscow and Kyiv, in which the West and China have recently played an indirect role. But, the absence of substantial updates in Asia appeared to have halted the risk-averse sentiment.

 

US 10-year and 2-year Treasury note rates oscillate around the three-month highs established the previous day, while S&P 500 Futures post modest gains despite Wall Street's negative closing price.

 

In the near future, conflicting sentiment and caution ahead of the FOMC Minutes could maintain XAU/USD on a precarious floor, but the hints for a Fed policy reversal will be sufficient to recall Gold purchasers.


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