Everbright Futures 0318 Gold Commentary: With the Federal Reserve Meeting Approaching, What Signals Should Gold Traders Focus On?

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Overnight international gold prices moved mixed; London spot gold fluctuated within a narrow range, COMEX gold futures rose 0.18%, SHFE gold fell 0.16%. In the early hours of Thursday Beijing time, the Federal Reserve will hold its March policy meeting. The focus of this meeting is on three main points: First, whether monetary policy will shift; the latest dot plot will be released. The December meeting showed significant internal disagreement among officials, with the median expectation of one rate cut (25 basis points) this year. The key focus now is whether there will be more rate cuts this year. Second, a summary of Q2 forecasts (SEP); Fed officials will make predictions on inflation and economic trends, especially the actual impact of the recent surge in oil prices in March on inflation levels. Third, post-meeting statements from Fed Chair Powell; this is the first Fed policy meeting after the Middle East conflict. With rising oil prices, weakening employment, and judicial investigations, Powell’s comments at the press conference are worth noting, especially how he assesses the “two-way risks” of inflation and growth triggered by the Middle East conflict-induced oil price spike. Gold may experience increased volatility after the meeting; trade cautiously.

On geopolitical fronts, the US-Iran conflict remains tense. Trump stated that most NATO allies have indicated they do not want to be involved in US military actions against Iran, and the US also said it “does not need anyone’s help.” Israel announced that two senior Iranian officials have been “eliminated.” The US-Iran conflict continues to be a focus in gold trading. It is recommended to adopt a buy-the-dip strategy. Whether future inflation expectations or stagflation expectations, gold’s strategic position will be enhanced. Under liquidity concerns, investors are given opportunities to buy at lower prices and hold.

Written by: Li Qi

Professional Qualification: F3046227

Trading Advisory Qualification: Z0016145

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