According to TDS Senior Commodity Strategist Ryan McKay, precious metals are experiencing a slowdown due to the strengthening US Dollar (USD). This trend underscores the current market sentiment surrounding commodities.
Looking ahead, McKay highlighted the pivotal role of upcoming economic data in shaping the outlook for Gold (XAU/USD). He emphasized that market participants are closely monitoring these indicators, which could significantly influence the broader market’s appetite for gold.
McKay specifically pointed to the upcoming Personal Consumption Expenditures (PCE) data as crucial, following recent reports of Consumer Price Index (CPI) and Producer Price Index (PPI) figures falling below expectations. He anticipates that the core segment of the PCE will show its weakest monthly increase of the year, likely around 0.13%. This potential easing in inflationary pressures might lead to greater certainty regarding the Federal Reserve’s approach to interest rate cuts.
However, McKay also noted that there is limited downside potential should economic data unexpectedly indicate strong performance. He highlighted that Commodity Trading Advisors (CTAs) have set a safety margin above $2,200/oz, suggesting minimal risk of substantial selling pressure. Moreover, continued demand from central banks and robust appetite for precious metals in Asian markets provide underlying support to the market.
In conclusion, the trajectory of precious metals, particularly gold, will hinge on the interplay between economic data releases, USD strength, and ongoing market dynamics influenced by global demand patterns and inflationary trends.
