Harmovest Capital | Daily Report: Higher Threshold for Rate Cuts as Fed Signals Caution

31/03/2026 – Market Brief

Key Highlights

• The Federal Reserve signaled a more cautious stance on rate cuts

• Safe-haven demand continues to rise amid economic and geopolitical uncertainty

• Gold remains supported by risk-off sentiment

Market Review

Federal Reserve Chair Jerome Powell indicated that the Fed is inclined to maintain stable interest rates and may look past short-term energy shocks caused by geopolitical tensions. However, he warned that if rising prices begin to shift public inflation expectations, the Federal Reserve may be forced to respond.

Powell highlighted that energy disruptions are often temporary, while monetary policy operates with a time lag, making immediate intervention less effective. Nevertheless, after several years of above-target inflation, the public may become more sensitive to future price increases, increasing the risk of persistent inflation expectations.

The Federal Reserve now faces a policy dilemma: energy shocks can push inflation higher while simultaneously slowing economic growth by increasing costs for businesses and households. This creates uncertainty for policymakers, as actions taken to control inflation could further weaken economic activity.

Recent comments from Fed officials suggest that the era of straightforward rate cuts has ended. Instead, interest rates are likely to remain elevated until there is clear evidence that inflation is declining or the labor market shows significant signs of weakening. As a result, expectations for near-term rate cuts have been reduced, reinforcing a cautious monetary policy outlook.

Today's Key Events

• Eurozone CPI

• Canada GDP

• U.S. JOLTS Job Openings

• U.S. Consumer Confidence

Markets will closely monitor the U.S. JOLTS data, as weaker job openings could confirm signs of economic slowdown.

Market Outlook

• U.S. Dollar: Expected to remain relatively strong in the short term

• Gold & Precious Metals: Supported by rising safe-haven demand

• U.S. Equities: May face pressure if economic data weakens

Market Sentiment

The Fear & Greed Index remains at 9 (Extreme Fear), indicating elevated risk aversion in the market. Rising energy prices, geopolitical tensions, and economic uncertainty have increased demand for safe-haven assets such as gold, silver, and U.S. Treasury bonds.

Technical View – Gold (XAUUSD)

Gold has recently tested key support near 4100 and is showing signs of rebound, while facing resistance around 4600. In the short term, prices are expected to trade within a consolidation range.

Strategy:

Buy on dips, focusing on the support zone near 4400.