Today the Federal Reserve concluded its first open market committee meeting of the year. Three important takeaways were revealed in both the written Fed statement and comments made by Chairman Powell at the following press conference.

First, as anticipated the Federal Reserve decided to maintain its target range for the federal funds rate between 5 ¼% and 5 ½%.

While it is a widely accepted assumption that the Federal Reserve has completed its rate hike cycle, the Fed has been very close to the chest regarding when it will initiate its first rate cut. It is almost a certainty that it will not occur tomorrow. According to the CME’s FedWatch tool, the probability of the Fed cutting rates tomorrow has a 2.3% of occurring.

Today’s report by the Commerce Department came in just under the expectations of economists polled by Dow Jones. Economists were forecasting that the PCE for December would come in at 3% year-over-year. Today’s report revealed that inflation is cooling with a reading of 2.9% yearly a decline of 0.3% when compared to November’s yearly inflation level which was at 3.2%. 

Today, the Commerce Department released the fourth quarter GDP report. The report revealed that the United States economy has grown at a rate of 3.3% during Q4 last year. Economic growth for the fourth quarter last year came in well above expectations by economists polled by Dow Jones. Economists were expecting that the fourth quarter GDP would only show an economic growth of 2%.

Both the dollar and gold dropped today as investors and traders wait for two important economic reports later this week. Tomorrow’s first reading of U.S. GDP for the final quarter (Q4) of last year, and Friday's PCE report for December. 

As of 4:30 PM ET, gold futures basis the most active February contract is currently up $7.30 (0.36%) and fixed at $2030.40. Although gold traded to a higher high than yesterday, gold has not fully regained the ground lost during Monday’s price decline. That being said, gold continues to have a bullish bias and strong support at $2015, which is based on last week’s lows.

Gold futures closed out the week with modest daily gains. As of 4:15 PM ET, the most active February futures contract is up $10 (0.49%) and fixed at $2031.60. Gold futures opened at $2027.40, traded to a high of $2044.90, and a low of $2022.20. The sharp declines on Tuesday and Wednesday resulted in a weekly decline. Trading activity over those two days resulted in a drop of $44.80. 

Gold futures hit an intraday low of $2004.60 yesterday and closed just off of that low at $2006.50. The $23 decline was largely in response to the retail sales report which revealed that consumer sales rose by 0.6% month over month in December. This would be the second consecutive day of strong price declines in gold. 

The United States Census Bureau released the advanced monthly sales report for December today, revealing that US retail sales rose 0.6% month over month in December 2023. The actual numbers came in line with economists’ forecasts that were predicting a 0.4% growth last month.

Recent comments by multiple officials of the Federal Reserve have forced overly optimistic analysts and market participants to have a more realistic viewpoint of the timing and depth of interest rate cuts this year.