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However, gains in gold remain capped due to expectations of prolonged higher interest rates by the Federal Reserve. Despite inflationary pressures, the Fed has shown little inclination to cut rates, which is keeping the upside for gold limited.
US Inflation Data and Federal Reserve Outlook Key for Gold
Investors are keenly watching the upcoming US Personal Consumption Expenditures (PCE) Price Index report, scheduled for release on Friday. As the Fed’s preferred inflation gauge, a lower PCE reading could increase hopes for a rate cut, potentially weakening the US Dollar and boosting gold prices. Conversely, a higher reading may bolster the dollar, putting pressure on gold.
Additionally, other key economic indicators, including Thursday’s US Q4 GDP print and Durable Goods Orders, will be closely monitored for clues on the Federal Reserve’s next moves. The latest hawkish FOMC minutes suggest that the Fed may keep interest rates elevated for an extended period, which could slow down gold’s gains.
Silver Prices Supported by Weak Dollar and Trade Uncertainty
Silver (XAG/USD) is also riding the wave of safe-haven demand, trading at $32.68 after reaching an intraday high of $32.76. The weaker US Dollar, coupled with uncertainties surrounding US trade policies, is supporting silver’s bullish momentum. However, like gold, silver’s gains are tempered by expectations of higher interest rates.
Looking ahead, the market’s focus remains on the US inflation data and Federal Reserve’s interest rate outlook. Any dovish shift by the Fed could spur further gains in gold and silver, whereas continued hawkishness may limit upside potential.
Investors are advised to monitor these key indicators closely, as they are likely to shape the market’s direction in the coming weeks.
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