Fed Forecast for July Month: Gold remains on track to post weekly losses. Next week, FOMC Chairman Jerome Powell will testify before Senate on Wednesday. If Powell suggests a 50 basis points (bps) rate hike in July, the yellow metal could gain traction, FXStreet’s Eren Sengezer reports.
Focus shifts to Powell’s testimony
“According to the CME Group FedWatch Tool, markets are currently pricing in an 88.5% probability of a 75 bps rate hike in July. The market positioning suggests that there is room for US yields to fall if Powell revives expectations for a 50 bps hike at the next meeting. On the other hand, another decisive rally in US yields could be hard to come by even if Powell confirms a 75 bps hike.”
“gold price could also be impacted by next week’s PMI reports. If PMI data from the euro area and Germany point to a loss of growth momentum in the private sector, market participants could see that as a reminder of the widening policy gap between the European Central Bank (ECB) and the Fed. In that scenario, gold could come under renewed bearish pressure.”
