Global stock markets showed resilience on Monday, managing to largely dismiss concerns over new tariff impositions. Despite the introduction of 25% levies on imports of steel and aluminum that took effect late Monday night, investors remained relatively undeterred. However, indices such as the S&P 500 and Eurostoxx 50 are anticipated to open lower today, influenced by these trade tensions.
The commodity markets are poised for significant movement with gold potentially resuming its uptrend. This optimism is driven by renewed speculation surrounding two potential Federal Reserve rate cuts later this year. Key to the next directional move in gold prices will be the US Consumer Price Index (CPI) release and President Trump's implementation of reciprocal tariffs. Analysts project that both the monthly headline CPI and core numbers will arrive at 0.3% for the same period, providing crucial data for market forecasts.
The Relative Strength Index (RSI), a technical indicator, has turned lower but currently defends the midline, standing near 52.50. This suggests a cautious outlook on gold's immediate trajectory. Meanwhile, in Wednesday's Asian trading session, USD/JPY is extending its gains beyond 153.50, indicating a strong performance of the US dollar against the Japanese yen.
Inflation metrics remain a focal point for investors. The US annual CPI inflation is expected to hold steady at 2.9% in January, while the core figure is anticipated to ease slightly to 3.1%. These figures will be pivotal as they can influence the Federal Reserve's policy decisions and consequently affect gold prices. A four-hourly candlestick closing below a certain threshold could reinforce gold’s corrective downside, signaling further potential declines.
Market participants have adjusted their expectations regarding Federal Reserve interest rate cuts this year, now predicting only one reduction in July. This shift reflects comments from Federal Reserve Chairman Jerome Powell, who hinted that the central bank would maintain its current policy stance for the time being.
Concurrently, the Japanese yen continues to lose ground amid comments from Bank of Japan Governor Ueda and the ongoing concerns over President Trump's trade tariffs. These developments have contributed to a weaker yen, impacting currency markets globally.
The upcoming US Consumer Price Index (CPI) data, scheduled for release later today, holds significant implications for the gold market. Investors are keenly awaiting this data for fresh directional impetus on gold prices as they navigate through the complexities of trade policies and economic indicators.