SEP Lowers Economic Forecast: U.S. Economy Set for Soft Landing

The June FOMC meeting leaned slightly hawkish. Although the outcome fell short of expectations and the Fed made no mention of SLR (Supplementary Leverage Ratio) policies, sources report that an SLR-related meeting is scheduled for June 25.

While the latest dot plot maintained projections for two rate cuts in 2024, expectations for rate cuts in 2026 and 2027 have been scaled back. This reflects the Feds cautious and steady stance on inflation, focusing less on actual rate ranges and more on communicating inflation sentiment. The dot plot itself holds limited forward guidance.

In the latest Summary of Economic Projections (SEP), the Fed lowered its GDP outlook for 2025–2026 while raising its projections for unemployment and core PCE inflation through 2027, signaling a path toward a soft landing.

In my view, weaker economic expectations may actually reduce downside pressure on risk assets in Q3. Golds crowded trade positioning is also likely to unwind. Given the constraints of a high-rate environment, gold's upward momentum is expected to be limited.

The Fed remains cautious in assessing the inflationary impact of tariffs. Until a final decision on tariffs is made, keeping the yield curve at elevated levels is a logical strategy. Although the market believes tariffs won't affect inflation in the short term, the Fed is focusing more on managing long-term inflation expectations.

Conclusion:

Following the FOMC meeting, fears of a U.S. recession have mostly faded. With a soft landing now the market consensus, future economic growth estimates are likely to be revised upward. If inflation data continues to surprise to the downside, risk appetite could rise further. Simply put, the later a FOMO rally begins, the lower the market risk.

Gold Technical Analysis

Gold continues to trade in a sideways and choppy pattern, forming lower highs and lower lows. Investors should maintain a bearish trading strategy. Weve revised our Fibonacci target lower to the 3313 level. Short-term trading may benefit from selling into spikes; if new lows are breached, consider exiting to capture price differentials.

Support levels: 3366 / 3342 / 3313

Resistance levels: 3384 / 3398

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