As we begin a new week, gold prices are once again attempting to reverse the selling pressure and move into positive territory. Given the uncertainty surrounding the political agenda and the sudden rise of the FED’s interest rate cut expectations from one to three, we continue to forecast an increase in demand for precious metals in the coming days.
Last week in the US, the critical Unemployment Claims data came in higher than expected. While expectations were around 220K, the actual number was 243K, bringing back concerns over potential deterioration in the labor market. On the other hand, the Core Personal Consumption Expenditures (PCE) Price Index decreased from 2.9% in the previous month to 2.6% in January. Following this crucial data, the probability of a FED interest rate cut has increased to 0.75 basis points by the end of 2025.
In Turkey, last week’s critical Q4 GDP growth figures were released, showing a growth of 3.00%, higher than the 2.6% expected. This was seen positively for the Turkish economy. This week, we started with important inflation data from Turkey. Monthly inflation dropped to 39.05%. With this decrease in inflation, expectations of an interest rate cut by the Central Bank of the Republic of Turkey (CBRT) are once again on the table for this Thursday.
Meanwhile, in the US, we will be tracking significant data this week. On the first trading day, we will see critical PMI numbers, and on Wednesday, the ADP Non-Farm Employment Change will be an important leading indicator for the employment market. On the last trading day of the week, the Non-Farm Payrolls and Unemployment Rate will continue to be key data points for the market. The possibility of deterioration in the labor market could support the FED’s rate cut decision. After the employment reports, FED Chairman Powell’s market comments are likely to increase volatility.
Technically, for gold, the $2830 region aligns with the 233-day exponential moving average. If prices remain above this level, we can expect upward movements to continue. Specifically, the Fibonacci regions at $2950/$3120 remain our medium-term target.
Alongside the movement in gold, gram gold prices in Turkey have also reached historic high levels. Particularly, the CBRT's interest rate decision is expected this week, and we anticipate a continuation of rate cuts. These cuts will likely cause some upward movement in exchange rates. While the Dollar/TL in the Grand Bazaar is hovering around 36.44, gram gold prices have hit a record high of 3550/TL, and this week they continue to trade around 3410/TL. In Turkey, premiums on gold in USD terms have risen by $35, while premiums on kilograms have reached around $1200 compared to the London market.
According to CME Fed Watch, the probability of a 0.25 basis point rate cut in July is priced at around 45%.
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