The GOLD Price Movement: The Federal Reserve and Russia Sanctions
The Federal Reserve (The FED)
The FED’s Hammack stands firm on the wait-and-see approach while not fully ruling out the interest rate cut, especially with the tariffs’ impact on hand. She stated that, “I don’t see a need to reduce unless we see material weakening on the labor side.”
Especially when the job data we got recently is showing on the stronger side, while the inflation is still above the restrictive level. However, if the next data release suggests otherwise, then the odds would add more to the rate cut projections. If not, then the odds still weigh heavily on the rate hold. The market is now priced in for holding the rate in July with a likelihood of 95.3%, according to the CME Fedwatch Tool.
US-Russia
President Donald Trump threatened 100% sanctions on Russia in 50 days while imposing secondary sanctions on those who purchase oil from them, particularly from India and China, as Russian oil buyers. This comes when Trump loses his patience over the ceasefire between Russia and Ukraine war, while also providing the patriot missiles to Ukraine via NATO. According to Bloomberg’s opinion, Andreas Kluth, this could be seen as the move that the US is trying to pressure Moscow into ending the war.
Overall, the gold price now is lacking direction, as a mixed signal is being sent everywhere. One says to hold the interest rate for the sake of the inflation problem that could put the gold price down, and the other is seeking a higher tariff rate that could fuel more favor gold.
So, what now?
Focus on the inflation data and big bank earnings reports this week, as this will possibly spur some movement on the stock market and gold prices. As of now, many are optimistic about the data, which is why the gold price recently dropped—aka, the market priced in today’s data.
