Today’s market comment on behalf of Chris Weston Head of Research at Pepperstone
30th January 2025
The Fed may have signalled a wait-and-see approach, but as new data emerges and informs their view, the risk – we feel – is largely skewed to weaker job creation and inflation moving closer to target. As such, with the market pricing a 16% chance of a cut in March and two cuts by year-end that pricing seems more likely to price in additional rate cuts – a factor which would drive US 2-year Treasury yields lower, bull steepen the Treasury curve, and put upside pressure in gold. We also need to consider the anticipated weekend Trump tariff announcements, and while most think that Trump will push back the timeline on tariffs for Canada, Mexico and China, gold is a fair portfolio hedge against the risk that we are surprised and Canada are hit with 25% tariffs, and forced to counter. For now, the intraday price action suggests that the gold bulls have the upper hand and controlling the tape, and that move could get extra legs as we roll into the weekend and the prospect of a big announcement on Saturday (on tariffs) and possible gapping risk on the Monday futures reopen.