... rate cuts and weighed on gold prices in the past week.“However, the yellow metal's safe haven appeal remains intact on account of geopolitical tensions, and strong buying ahead of the Lunar New Year.
Market Probability Shifts for Fed Rate CutsTimePeriod Probability Before CPI Probability After CPI ... How reliable are prediction markets for forecasting Fed rate decisions?.
Lower interest rates diminish the opportunity cost of holding gold, which does not pay interest, thereby enhancing its appeal ... A reversal could be triggered by unexpectedly hot inflation data, forcing the Fed to delay or signal fewer rate cuts.
Decoding the Market’s Fed Rate Cut Probability ... They utilize sophisticated financial instruments, primarily federal funds futures and overnight index swaps, to place concrete bets on the future path of the Fed’s benchmark rate.
Since the Fed’s interest rate decisions affect the US dollar’s value, and EUR/USD represents the euro’s value against the dollar, CPI data creates immediate market reactions as traders adjust expectations for US monetary policy.
This cooling trend stands in stark contrast to the start of 2025, when a "hot" January CPI report of 3.0% forced the Fed to maintain high rates for longer than many had hoped ... After the Fed held rates ...
Canadian DollarUnder Pressure at 1.3600Exchange Rate ... Therefore, reduced expectations for near-term Fed rate cuts provided direct support to the US Dollar while applying downward pressure on the Canadian Dollar and other major currencies.
... case for the Fed to initiate or accelerate rate cuts ... For instance, prior to the Fed’s pause in rate hikes in late 2023, gold also entered a consolidation phase before embarking on a sustained rally.