03/05/2024: This Week in Gold with Market Updates:
Price Action:
Gold Price:
Gold opened the week trading at $2,338 an ounce after closing the previous week 2.3% lower and breaking its 5 week run to the upside. Gold is on track to close lower for the second consecutive week.
Price opened at $2,338 on Monday and consolidated for most of the day, only slightly deviating from the opening price to close the day $2 lower, at $2,336. Similar consolidation was seen in DXY, which allowed gold to have a subdued day.
On Tuesday, gold experienced its largest daily fall for the week. Price opened at $2,336 and consistently posted lower lows throughout the day, ultimately closing at $2,286. This equated to a 2.14% decline for the day. The fall in gold was pushed on by the rise in DXY, with the dollar climbing 0.6%. U.S. Consumer Confidence coming in lower than expected could have potentially contributed to gold’s fall throughout the day.
On Wednesday, gold started the day on a similar trend to Tuesday before reverting and climbing higher for the remainder of the day. Gold managed to recover some of the losses it experienced on Tuesday, climbing 1.47% to close the day at $2,320. Price was supported by a decrease in ADP Non-Farm employment change, a decrease in manufacturing PMI, and dovish statements from FED Chair, Jerome Powell.
On Thursday, gold gradually fell up until midday before consolidating for the remainder of the day. Price fell as much as 1.2% before slightly recovering and closing the day $16 below the open, at $2,304.
On Friday, price experienced a lot of consolidation throughout the day before hitting a weekly low of $2,277 (a 1.2% decline) after lower than expected Non-Farm Payrolls. Riskier assets, such as stocks and cryptocurrencies, saw moves to the upside, while gold moved lower. Price is on track to close the week lower. Gold, at the time of writing, is trading at $2,293 an ounce. Gold is on track to close the week 1.9% lower.
Silver Price:
Silver opened the week trading at $27.22 and followed a similar trend to gold.
Silver is on track to close the week lower for the second consecutive week, after breaking a run of 4 consecutive weekly moves higher the week prior.
At the time of writing, price is trading at $26.32, which is a 3.3% weekly decline.
Market Updates:
30/04/2024: EU CPI & EU GDP, U.S. Consumer Confidence:
Core CPI (Y-o-Y):
Core CPI in the Eurozone came in at 2.7%. This was hotter than the expected 2.6% but lower than the previous month’s figure of 2.9%. The ECB is monitoring inflation regularly and is expected to cut rates multiple times before the end of the year. It is expected that the ECB will diverge from the FED’s schedule and cut rates sooner rather than later.
Headline CPI (Y-o-Y):
Headline inflation came in at 2.4%, which was in line with analyst expectations and on par with the previous month’s figure. The ECB tends to look more closely at Core CPI when making monetary policy decisions.
EU GDP (Q1):
Gross Domestic Product in the EU was seen to increase Q-o-Q, showing a 0.3% expansion in Q1. This beat analyst expectations of 0.1% and the previous month’s figure of -0.1%.
U.S. Consumer Confidence:
Consumer confidence in the U.S. was seen to contract for the month of April. Data showed a decrease to 97, which was lower than the expected 104 and the previous month’s figure of 103.1. Lowering consumer confidence is generally due to uncertain economic conditions. This could be related to the recent inflationary pressures that the U.S. is facing and the uncertainty surrounding future monetary policy. With economic uncertainty, gold tends to perform well due to safe-haven demand.
01/05/2024: U.S. Manufacturing PMI and FOMC:
U.S. Manufacturing PMI:
Like ADP Non-Farm payrolls, U.S. manufacturing PMI was lower when compared to the previous month but a beat on expectations. The figure came in at 50 which is right on the threshold of expansion/contraction. A reading greater than 50 signals expansion while a reading lower than 50 signals contraction.
FOMC Statement & Interest Rate Decision:
FED Chair, Jerome Powell, spoke on Wednesday and gave the impression that rates may stay higher for longer. However, a dovish Powell stated that rate cuts are not ruled out and rejected claims that rates could rise further. Powell shut down the idea of stagnation, stating that growth remains strong and inflation is falling. This dovish tone led investors to believe that the FED will indeed begin to cut rates before the end of the year.
The FED decided to keep rates unchanged, at 5.5%, for the 7th consecutive meeting.
03/05/2024: Non-Farm Payrolls, Unemployment Change:
Non-farm payrolls came in at 175,000, which was considerably lower than analyst expectations of 238,000 and the previous month’s figure of 315,000. This had an immediate effect on gold, pushing prices to a new weekly low. Stocks moved higher, with the S&P climbing 1.4%.
