By Bhavik Patel

Yesterday’s revision of fourth-quarter 2023 U.S. gross domestic product readings showed GDP up 3.2%, year-on-year, versus the initial reading of up 3.3%. GDP data was not a big markets-mover, as the numbers did not stray far from market expectations.  

The bigger U.S. data point of the week is likely going to be Thursday personal income and outlays report for January which is preferred measure of inflation by US Fed. The most recent U.S. inflation data is a little warmer than anticipated. 

Although it wasn’t too hot, the data was nevertheless warm enough to probably convince the Federal Reserve to postpone cutting interest rates until the second half of 2024. The market’s reaction to the most recent U.S. inflation data will be seen in the price activity of the Treasury bond and note futures markets. 

Keep in mind that the pricing of Treasury futures move against the more closely watched yields. The last four weeks have seen a decline in the price of US T-Bonds and T-Notes. This implies that Treasury traders believe the U.S. inflation statistics will remain too warm to support a rate cut by the Federal Reserve this spring.

In MCX, price has been confined in narrow range of 61800-62400 for past 7-8 trading sessions. The momentum oscillator is also stuck in neutral at 53 clearly indicating that traders and investors are waiting for PCE data before taking any fresh positions.

 Open interest has also declined indicating old positions getting squared off. 62400 seems to be immediate resistance and breach above that will push prices around 63000-63500. On the downside, 61000 is strong support in MCX while $2000 in COMEX. We believe any strong sell off is only probable if COMEX gold sustains below $2000.

(Bhavik Patel is a commodity and currency analyst at Tradebull Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)