The yellow metal rose 2.10% for the week, recording its fifth consecutive weekly rise despite a firmer US dollar index and higher US yields. US ten-year yields fell one basis point to 4.62% on Friday; however, yields rose by around 2.50% on a weekly basis due to the Fed’s hawkish rhetoric, amid encouraging US macroeconomic data. The U.S. Dollar Index rose about 0.10% for the week, after falling slightly by 0.05% to settle at 1.0612 on the last trading day of the week.
Yields have reached new highs in 2024 as the odds of multiple rate cuts diminish.
Data collection
US Retail Sales Progress data (March) was blistering numbers across the board, with overall retail sales up 0.70% compared to forecasts of 40%; previous data was revised upwards from 0.60% to 0.90% previously. Retail sales excluding automobiles rose 1.10% versus an estimate of 0.50%. The control group jumped 1.10% compared to forecasts of 0.40%, with previous data revised upwards. Likewise, the weekly jobs report and Philadelphia Business Outlook data were better than expected; however, housing data was lower than expected.
The hawkish speech of the federal government
U.S. Federal Reserve Chairman Powell, during a fireside chat on economic trends in North America at the Washington Forum at the Wilson Center in Washington, DC, on April 16, said the U.S. economy had performed quite strongly and that recent data showed a lack of progress in this area. inflation. He added that if inflation doesn’t fall, the Fed can hold rates as long as necessary. Federal Reserve Bank of Chicago President Austan Goolsbee said it would make sense to wait until there is more clarity on the inflation outlook before taking policy action because progress on inflation were installed. Chairman Raphael Bostic expects US inflation to return to 2% at a slower pace than expected. He added that the Fed won’t be able to cut rates until the end of the year. John Williams does not feel the urgency to cut rates because the economy is strong, although a Fed rate hike is not his benchmark. The Fed’s Mester said inflation was higher than expected and more confidence was needed to ensure inflation’s path.
Geopolitical monitoring
The United States and the United Kingdom imposed a new round of sanctions on Iran on Thursday, fearing that Tehran’s unprecedented attack on Israel could fuel a wider war in the Middle East.
Iran has warned it could review its nuclear policy if Israel threatens it.
Iran’s foreign minister told the UN Security Council that Iran’s defense and countermeasures are over and that Israel must be forced to stop any further military adventurism against Iran’s interests. Iran.
Israel’s small-scale attack on Iran will keep tensions simmering, although it is possible that tensions will remain contained for the time being.
Investment demand remains sluggish
Total known global gold ETF holdings fell to 81.26 MOz on April 18, which is also lower on a weekly basis.
China’s demand
China’s wholesale demand fell in March, according to the World Gold Council, even as investors continue to buy at high prices.
Data next week
Top US data next week includes S&P Global US Manufacturing PMI (April Preliminary), S&P Global US Services PMI (April Preliminary), New Home Sales (March) , durable goods orders (March preliminary), GDP progress in the first quarter, weekly employment report, personal data. personal income and spending (March), PCE deflator (March), University of Michigan sentiment, and inflation expectations (April final).
Outside Europe, the focus will be on UK manufacturing and services (April preliminary); Gfk consumer confidence (April); Eurozone Services and Manufacturing PMI (April preliminary), IFO business climate (April); and Germany’s Manufacturing and Services PMIs (April preliminary) and IFO Business Climate (April).
The Chinese PBoC will decide the preferential rates for its 5-year and 1-year loans.
Weekly Outlook
Gold is unable to hold above $2,400 while the dollar index and US yields are up slightly. Unless geopolitical tensions escalate, gold is likely to undergo a downward correction, even if the overall outlook remains positive.
Investors will be closely watching US PMI, GDP and core PCE deflator inflation data to be released next week.
Support is $2,360/$2,320/$2,300/$2,265. Resistance is $2,450/$2,500.
(The author is Associate Vice President, Fundamental Currencies and Commodities at Sharekhan by BNP Paribas)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
