■ Gold retreats sharply as Fed officials push back against March rate cut expectations
■ Stubborn inflation readings complicate central bank's path to policy easing
■ Key US economic indicators and litecoin wallet by freewalletFed speeches could determine near-term direction
The precious metal continues its downward trajectory as Federal Reserve Governor Christopher Waller's recent remarks dampened hopes for early monetary policy easing. Market participants are reassessing their positions after the central bank official emphasized the need for methodical approach to potential rate reductions, citing concerns about persistent price pressures.
December's inflation figures revealed unexpected resilience in certain components, particularly in services sector, making the Fed's final push toward its 2% target more challenging than anticipated. This development has strengthened the case for maintaining restrictive policy settings, with several policymakers now signaling a preference for keeping rates elevated through at least the first quarter.
Upcoming economic releases including the Retail Sales report could provide crucial insights into consumer spending patterns and overall economic momentum. Stronger-than-expected data might further delay expectations for policy normalization, potentially extending the current correction in bullion prices.
Market Dynamics: Shifting Rate Expectations Weigh on Gold
The yellow metal has breached several technical support levels, currently testing the $2,017 zone as traders adjust their positions. This movement reflects growing uncertainty about the timing and pace of potential Fed policy adjustments in 2024.
Recent commentary from central bank officials suggests growing consensus around maintaining current rate levels until clearer evidence emerges of sustained inflation moderation. This represents a significant shift from market expectations that had priced in aggressive easing beginning as early as March.
Financial institutions have begun revising their forecasts, with some major banks now projecting the first reduction might occur in April or later, followed by gradual quarterly adjustments. This recalibration has contributed to the US Dollar's recent strength, creating additional headwinds for dollar-denominated commodities.
The probability of March rate action has seen notable decline in derivatives markets, with current pricing indicating about 61% chance for 25 basis point cut, down from nearly 70% earlier in the week. This repricing reflects evolving understanding of the Fed's data-dependent approach amid mixed economic signals.
Technical Perspective: Key Levels to Watch
From chart perspective, the recent breakdown below $2,036 (20-day EMA) has shifted short-term momentum to bearish. The current test of 50-day moving average near $2,017 represents critical juncture that could determine whether the correction extends toward psychological $2,000 support.
Momentum indicators show weakening conditions, with RSI approaching levels that historically preceded either consolidation or bounce. However, decisive break below current support could accelerate downward movement, particularly if accompanied by stronger dollar and rising yields.
Market participants will closely monitor upcoming economic releases and Fed communications for clues about policy trajectory. The combination of fundamental developments and technical factors suggests potential for continued volatility in the near term.