The price of gold fell 0.2% after rising 0.5% yesterday and retreating from its lowest level since May 6. The strengthening of the US currency is putting pressure on prices, while investors are waiting for data on the US CPI and the Fed meeting.
Experts warn that since inflation data will be released just a few hours before the Fed's rate decision, we might see a last-minute panic and elevated levels of volatility should inflation come in hot. According to forecasts, the overall CPI increased by 0.1% in May, which corresponds to an increase of 3.3% year-on-year. As for the base CPI, an increase of 0.3% per month and 3.5% per annum is projected. The results of the May CPI report are unlikely to have a significant impact on the outcome of the Fed's June meeting, although Fed officials will undoubtedly pay close attention to this. In addition to the rate decision, the updated economic forecasts of the Fed representatives will be important for investors, which are expected to show fewer interest rate cuts than policymakers anticipated three months ago amid unexpectedly harsh inflation. According to the CME FedWatch Tool, markets see a 8.9% probability of a 25 basis point rate cut at the Fed meeting in July, a 50.8% probability of a rate cut in September, and a 65.3% probability of monetary policy easing in November.