Gold prices showed some upward movement on Monday, albeit with limited gains as market participants exercised caution ahead of significant events in the coming sessions, notably the FOMC announcement scheduled for Wednesday. In this scenario, XAU/USD edged up by approximately 0.2% during early afternoon trading in New York, finding support around the $2,150 region.
The Federal Reserve is set to convene for its March meeting this week. While expectations lean towards the central bank maintaining its current policy settings, there’s speculation that the institution, led by Jerome Powell, may adjust its forward guidance and economic outlook in response to recent disappointing developments on the inflation front.
The unexpected uptick in both CPI and PPI reports in recent months has raised concerns about a potential reversal in the progress towards disinflation. Consequently, the Fed might adopt a more cautious stance, delaying any plans for a shift towards a looser monetary policy and scaling back the scope of future easing measures. This adjustment could translate into the possibility of two quarter-point rate cuts in 2024 instead of the previously anticipated three.