On Thursday, the U.Seconomy presented data that significantly bolstered market expectations regarding the Federal Reserve’s cautious approach to interest rate cuts over the next twelve monthsThis resulted in the dollar index reaching a two-year high, closing up by 0.145% at 108.42. Meanwhile, the U.STreasury yields showcased a mixed performance, with the yield on the two-year Treasury slightly retreating to 4.363% while the yield on the ten-year Treasury surged near the 4.6% mark before settling at 4.575%. Notably, the yield curve spread between two-year and ten-year Treasury bonds hit its highest level since June 2022. The three major U.Sstock indexes portrayed a divided sentiment: the Dow Jones Industrial Average edged up by 0.04%, concluding a ten-day downward trend, whereas the S&P 500 index dipped by 0.09% and the Nasdaq composite fell by 0.1%.

The Federal Reserve’s announcement of a 25-basis-point interest rate cut, coupled with Chair Jerome Powell's remarks, appeared to carry a hawkish tone which negatively impacted gold prices

The Fed revised down its expectations for future easing measures, projecting only two rate cuts in 2025, each by 25 basis points, which was lower than previous forecastsThis shift indicates the Fed's heightened concerns regarding inflation risks and conveys a cautious stance toward economic growth.

These policy adjustments resonate with a backdrop of robust U.Seconomic indicators, further solidifying market anticipations about the Fed’s future directionThe final estimate of the U.SGDP growth for the third quarter was revised upward to 3.1%, surpassing expectations, while initial claims for unemployment benefits saw a notable decline, illustrating a resilient labor marketThese favorable figures suggest that the U.Seconomy is proving to be more resilient than anticipated, which supports the Fed's stance of maintaining a relatively tight monetary policy.

For the gold market, the Fed's hawkish outlook exerts considerable pressure on prices

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Given that gold is a non-yielding asset, its price inversely correlates with interest ratesTraditionally, a low-interest-rate environment benefits gold, as it minimizes the opportunity cost of holding itHowever, with the Fed indicating a deceleration of rate cuts or possibly a pause altogether, the opportunity cost of holding gold rises, dampening demand for the metalAdditionally, the strengthening dollar negatively affects the price of gold, which is denominated in dollars.

Market expectations regarding inflation currently reflect a divergence of opinionsAlthough recent inflation data has dipped, it remains above the Fed's target levels, and officials have voiced concerns about persistently high inflationAs the core PCE data—an inflation indicator favored by the Fed—is set for release, it will draw significant market attention, as its outcomes could distinctly influence gold prices

A report confirming persistent inflation may bolster gold prices, in contrast, a lower reading could further pressure them.

In recent times, certain geopolitical events have had only temporary and limited impacts on gold pricesThe dynamics in global politics can shift rapidly; however, the gold market has shown resilience despite these conditions, reflecting a complex interplay of various factors.

Investor sentiment plays a crucial role in the volatility of gold pricesRecent fluctuations in equity markets indicate investor concerns regarding the global economic growth outlook, potentially increasing demand for gold as a safe-haven assetHowever, robust economic indicators and the Federal Reserve's hawkish positioning have mitigated fears surrounding risk assets to some degree, thus diminishing gold's appeal as a hedge.

To summarize, the short-term outlook for gold appears weak, with investors today focusing on the pressure zone defined by the downward trend line in one-hour intervals

After adjustment under pressure, a short-selling strategy could emerge as attractive.

Regarding oil prices, the Federal Reserve's recent interest rate decision, though anticipated with a 25-basis-point cut, carries implications that weigh negatively on crude oil pricingThe Fed's projection of only two rate cuts in 2025 underscores its focus on inflation risks while adopting a reserved viewpoint towards economic growthThis relatively tighter monetary policy stance elevates the value of the dollar, thereby rendering oil, priced in dollars, relatively more expensive, which in turn suppresses demand.

This alignment with robust U.Seconomic indicators further influences the oil marketThe revision of third-quarter GDP growth to 3.1% exceeded expectations while initial claims for unemployment benefits highlighted ongoing strength in the labor market

Although these data points illustrate economic resilience, they also suggest the Fed may not need to implement substantial rate cuts to stimulate growth, thus constraining potential boosts to oil demandThe combined effects of strong economic data and a hawkish Fed position suggest market expectations for economic growth may not be as vigorous as previously anticipated, leading to lowered expectations for energy demand.

Beyond U.Seconomic data, a slowdown in global economic growth is also exerting pressure on oil demandThe European Central Bank retains a cautious approach towards further easing monetary policy, reflecting the challenges faced by the global economyInitiatives toward energy transition, particularly the investments and utilization of renewable energy by the world's largest oil importers, have significantly dampened oil demand.

Geopolitical risks remain a vital component influencing oil prices