Gold approached the level of $1,910 ahead of releasing updated readings of certain important economic indicators. Market participants expect these indicators to give them clues, and special attention will be drawn to any signs of recession coming.
Such data as new readings on inflation in the United Kingdom and European countries, combined with updated information on retail sales and industrial production in the U.S., will be of crucial importance for the markets. These data might help in determining whether the largest economies of the world are to enter recession because of monetary tightening.
The Bank of Japan’s policy meeting, which is scheduled on Wednesday, will also be in the spotlight. This event is of particular interest to the markets, especially after the central bank’s unexpected shift towards a more hawkish attitude made during its last meeting in December. It’s necessary to mention that this action had a significant impact on the dollar, while also providing slight support to commodity prices.
The consequences of monetary tightening, initiated by central banks last year, have already become notable in many economic spheres, and the markets are now preparing for а possible slowdown in major world economies.
It’s suggested that recession might create favorable conditions for gold, especially considering that it might cause the Fed to slow or even pause its cycle of monetary tightening.