A stronger dollar, supported by the data, reached a two-year high. This rise in interest rates and the dollar has dampened gold’s appeal as the metal becomes more expensive for foreign buyers and less attractive compared to interest-bearing assets.
Will key economic data change the Fed’s stance?
Markets are now focused on this week’s crucial economic reports, including the Consumer Price Index (CPI), Producer Price Index (PPI) and retail sales data. These releases will be closely scrutinized for signs of inflationary pressure that could influence the Federal Reserve’s policy trajectory.
Speeches from Fed officials, including New York Fed President John Williams, are also expected to provide clarity. With the labor market remaining strong and inflation risks persisting, traders are wondering whether the Fed’s higher-for-longer interest rate policy can be strengthened.
Can Safe-Haven Demand Save Gold?
While rising rates and the dollar are short-term headwinds for gold, demand for safe havens remains a potential counterforce. Market uncertainties, including higher energy prices and geopolitical risks, could support gold as a hedge against inflation and volatility.