GoldPrice.

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets—and may continue to into the future.

Gold spot prices again enjoyed the rarified air of new all-time highs this week, briefly, pricing bids above $2200/oz; at the same time, we may have just seen the market put in the “top” for the yellow metal’s current cycle. This week, all eyes were focused on the outcomes of the March FOMC meeting and the Fed’s updated Staff Economic Projections. Just a cursory look at this week’s gold chart shows that Wednesday’s post-FOMC trading did not disappoint in this respect.

So, what kind of week has it been?

There was, of course, no change to interest rates this time around, which was a near-certainty as early as two weeks ago. What investors and other Fed watchers were keying in on was how the central bankers would signal their presumed or preferred plans for eventually (probably) cutting interest rates and easing the restriction on US economic growth before the end of this year. Here, the FOMC’s outlook (as communicated in the consensus statement and repeatedly in Chair Jerome Powell’s post-meeting Q&A) hasn’t really changed: while the Fed feels positive about the progress made in cooling inflation, they’re not yet ready to declare a final victory in the matter; nor are they concerned about too great a downside risk to the economy at this time from “elevated” interest rates remaining in place. While the FOMC continues to hold a stance of “wait and see,” the dot plot in this quarter’s Staff Economic Projections still points to three interest rate cuts in 2024 (assuming each cut to be in an increment of -0.25%).

In fits and starts, gold prices climbed aggressively higher following the FOMC statement and then Powell’s press conference. The precious metal faced only light resistance in a run that saw spot top-out at $2185/oz in US-based trading before Asian markets’ first chance to trade the FOMC saw the all-time peaks above $2200, which actually held firm through the European morning and up to the early morning hours of New York’s Thursday.

While it’s reasonable to assume that the Fed offering up that rate cuts are still coming this year would lend to both the extended gold rally and the further softening of the US Dollar (based on the promise of lower rates creating a friendlier environment for yield-free gold investments,) this has been the consensus view for months now. It’s hard to frame this reiteration as any kind of “surprise” or otherwise new information that would drive a $40+ repricing of gold. What may be the more impactful tailwind, as we’ve begun pointing to recently, is a renewed level of concern that the FOMC may wait too long to begin lowering rates, dipping the US economy into a recession of one level of severity or another. Different from the last time (up to less than a year ago), there was uncertainty about whether the Fed could pull off a “soft landing” with lower inflation but steady growth; investors are keener to place their bets on the traditional safe haven of gold instead of the US Dollar. How strong this signal should be assumed to be in the gold market is still tough to quantify, but seeing notable players in the markets cast doubt on whether the Fed will meaningfully lower rates in 2024 certainly makes a case that we should be tracking the development of this idea through the next quarter.

Either way, we are seeing a tangible amount of moderation and correction as investors and analysts digest Fed Day. With the Thursday morning open in New York, traders and investors were happy to step back into the “cheaper” US Dollar, bouncing the Greenback higher and forcing a retracement of gold from the highs. Still, despite giving back much of Wednesday’s rally, gold has continued to demonstrate a strong level of support at $2160/oz. Any stronger test of this support next week will have to come from investors’ continued processing of this week’s news, as the final stretch of Q1 2024 brings little to the table in terms of macroeconomic data to be reckoned with.

For now, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see everyone back here next week for another market recap.