Fed Comments to Spur Commodity Prices

The FOMC and ECB meetings will be closely watched as both are expected to announce a 25 bps rate hike. While gold prices may ease ahead of the FOMC, any indication of a dovish stance in comments could trigger an upside in gold prices.

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Global investors have been confused by conflicting US data releases, which have complicated the job of the Federal Reserve. The dollar initially fell to 101 levels due to signs of stress in the banking sector and weaker business spending, but rebounded to 102 levels due to sticky inflation and slowing growth.

Despite the US first-quarter GDP slowing to 1.1 per cent annualized rate, the US Personal consumption expenditures price index increased to 4.2 per cent, beating expectations of 3.7 per cent. Additionally, jobless claims totaled 230,000, hinting at a tight labor market. However, inflation remains stubborn and is unlikely to deter the Fed from raising rates in the May meeting, which is already priced in at 85 per cent according to the CME Fedwatch tool.