AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
Federal Reserve Chairman Jerome Powell’s recent testimony in Congress provided little new information about the timing of potential interest rate cuts, but gold futures prices still saw a modest increase.
In his testimony before Congress, Powell emphasized the Fed’s data-dependent decision-making approach and stated that more evidence of sustained inflation reduction is needed before initiating rate cuts. Regarding the timing of rate cuts, Powell remained cautious, saying he is not yet prepared to confirm that the inflation rate would sustainably decline to the Fed’s 2% target and did not provide specific details on the timing or number of rate cuts this year.
Nevertheless, gold prices continued to rise. Gold futures for August delivery increased by $11.80 𝑡𝑜 2,379.70 per ounce, a gain of 0.50%. From a technical analysis perspective, the daily chart for gold shows a steady upward trend starting from the key support level of $2,277.
Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, noted that Powell’s speech did not provide the market with new, unknown information, but he mentioned the cooling of the labor market, which was confirmed by last Friday’s employment data. The June employment report released last Friday showed an increase in the unemployment rate and a downward revision of the job growth data for the previous two months.
Powell expressed optimism about the U.S. economy achieving a “soft landing,” where inflation targets are met without significantly increasing unemployment. When inflation soared to a 40-year high in 2022, this goal seemed unrealistic and difficult to achieve, but now it appears more feasible. While Powell acknowledged that inflation has retreated from recent highs, he still emphasized the need for further progress before considering rate cuts.
In addition to Powell’s congressional testimony, investor attention is now turning to the inflation reports due this Thursday. The Consumer Price Index (CPI) for June is expected to continue its decline to an annualized rate of 3.1%, down from 3.3% in May. The Producer Price Index (PPI) for June, slated for release on Friday, is expected to increase by 0.2%, higher than the 0.1% rise in May.
Powell’s cautious stance and expectations of cooling inflation have contributed to a weakening of the dollar index, which dipped 0.11% to 104.994. The CME’s FedWatch tool indicates a 95.3% probability that the Fed will maintain current interest rates this month, but a 73.3% chance of a rate cut in September, with probabilities of a 25 basis point cut and a 50 basis point cut being 70% and 3.3%, respectively.
In the current market environment, the trajectory of the gold market is influenced by expectations of Fed policy, inflation data performance, and global economic uncertainties. With inflation gradually easing and the Fed maintaining tight monetary policy for an extended period, the risks to growth prospects increase, limiting the downside for gold but offering significant upside potential.
