Analysts at TD Securities have dissected the Federal Reserve’s recent announcements, suggesting that while the Fed‘s stance appeared hawkish at first glance, underlying details paint a more nuanced picture.
The Fed’s projections indicate a single rate cut anticipated for 2024, contrary to market expectations of two cuts. However, looking ahead to 2026, the fed funds rate is projected to remain unchanged at 3.125%, aligning with March’s forecasts. Notably, a majority of Fed officials anticipate the commencement of easing measures later this year.
According to TD Securities analysts, the Federal Open Market Committee (FOMC) appears divided primarily over the number of cuts expected in 2024. Seven Fed officials forecast one cut, while eight anticipate two. The balance is tipped by four officials now expecting no cuts this year, up from two in March.
Despite these dynamics, the Gold (XAU/USD) markets initially surrendered gains made on morning Consumer Price Index (CPI) data, focusing instead on forthcoming economic data. This includes the recent Producer Price Index (PPI) data, which fell below expectations and has once again bolstered demand for precious metals.
However, analysts caution that Gold has weakened its safety buffer, with the first significant selling trigger now set at $2,227 per ounce.
