Gold futures surged to record levels on Thursday, with the June contract breaking through the $2,200 per ounce mark and soaring to an astonishing $2,233 per ounce at the time of publication.
Currently, market data suggests a 62% probability of the first interest rate cut happening in June. However, any delay in the pivot to the third quarter or a reduction in the number of expected cuts could trigger a correction in both silver and gold prices. Gold, in particular, may be susceptible to a pullback towards key support levels following its steady ascent.
Looking ahead, after the dust settles from the Federal Reserve meeting, market attention will turn towards upcoming macroeconomic data. Today, investors await the release of GDP growth figures from the US, with expectations of a significant decline compared to recent quarters.
Despite uncertainties, there are no clear indications of a recession in the US economy. The prevailing scenario suggests a soft landing, which would likely be welcomed by Federal Reserve officials.
Friday’s most crucial reading will be the Fed‘s preferred measure of inflation, the PCE inflation. Current market consensus forecasts disinflation slowing at 2.8% year-on-year, aligning with the stagnation of the headline consumer inflation index. Final readings in line with forecasts could provide the Fed with room to postpone interest rate cuts.
Gold Technical Analysis
Gold prices, despite experiencing two minor corrections, continue their upward trajectory towards historical highs. However, the direction may pivot depending on upcoming US data. In the event of increased PCE inflation and GDP figures, sellers may temporarily take control. In such a scenario, sellers are likely to target the support level around $2150 per ounce, previously tested.
Longer-term corrections to approximately $2100 per ounce could present attractive buying opportunities at lower prices.
Silver Consolidation
Silver prices paused around the $26 per ounce mark after a strong upward movement, which acts as a significant barrier and marks the highest point of a long-term consolidation phase. Presently, silver is expected to consolidate while the US dollar maintains its ascent. In this outlook, bearish targets hover around $22 per ounce, with $20 per ounce as a robust support area.
Conversely, significantly weaker data from the US economy could prompt buyers to aim for the $28 per ounce region.
