Gold: Gold prices climb, eye record highs amid inflation, Fed signals
The Gold prices are flying high after the Iran threatened military troops against Israel for its embassy attacked in Syria. Israel and Hamas ceasefire talks under the progress. Fed Members said inflation is still above 2% target and labour market tightened in the US economy. So June month rate cut bets also faded by the economists view, So Gold prices are moving higher against USD.
XAUUSD has broken box pattern in upside
Gold prices experienced a modest uptick in Asian trading on Tuesday, persisting within range of record highs amidst sustained demand for the precious metal as a safe haven. Investors awaited further insights into U.S. inflation trends and potential shifts in interest rates.
Having surpassed the $2,350 mark per ounce on Monday, gold retreated slightly as the U.S. dollar and Treasury yields maintained strength. Nevertheless, the allure of gold as a safe haven remained robust, particularly amidst escalating geopolitical tensions in regions such as the Middle East and Russia.
Investor attention was firmly fixed on the release of the consumer price index (CPI) data for March scheduled for Wednesday. Projections indicated expectations for persistent inflationary pressures in the U.S., especially following a robust nonfarm payrolls report released recently, which led traders to significantly revise downwards their anticipation of a Fed rate cut in June.
Additionally, anticipation surrounded the publication of the Federal Reserve’s minutes from its March meeting, scheduled for the same day. Despite hints of a dovish stance on interest rates during the meeting, subsequent remarks from several Fed officials underscored concerns regarding sticky inflation, thus dampening expectations of imminent rate adjustments.
Although the prospect of delayed rate cuts by the Fed typically diminishes gold’s attractiveness, the metal continued to benefit from heightened demand for safe haven assets.
Geopolitical tensions in the Middle East, particularly amid Iran’s threats of military action against Israel, further bolstered the appeal of gold as a safe haven. Similarly, ongoing conflicts between Russia and Ukraine, exacerbated by recent strikes on the Zaporizhzhia nuclear power plant, contributed to sustained demand for gold amidst global uncertainty.
Gold: Gold Extends Rally, Surpasses $2,350 All-Time High
The Gold prices are flying high after the Iran threatened military troops against Israel for its embassy attacked in Syria. Israel and Hamas ceasefire talks under the progress. Fed Members said inflation is still above 2% target and labour market tightened in the US economy. So June month rate cut bets also faded by the economists view, So Gold prices are moving higher against USD.
XAUUSD is moving in uptrend line and market has reached higher low area of the pattern
Gold prices (XAU/USD) continued their upward momentum for the third consecutive day on Tuesday, marking the tenth positive move in the past eleven days. During the first half of the European trading session, gold climbed to a fresh all-time high. This surge in gold prices was fueled by several factors, including fading optimism regarding a potential ceasefire between Israel and Hamas, which contributed to a cautious market sentiment. Investors turned to gold as a safe-haven asset amidst the uncertain geopolitical landscape.
Furthermore, the flight to safety caused a retreat in US Treasury bond yields from multi-month peaks reached on Monday. As a result, the US Dollar (USD) weakened, providing additional support to gold, which doesn’t yield interest. However, expectations that the Federal Reserve (Fed) might delay interest rate cuts could limit the decline in US bond yields and the USD, potentially capping the upside potential for gold, especially considering the current overbought conditions.
Traders are awaiting further cues about the Fed’s stance on interest rates before making significant trading decisions. The release of US consumer inflation figures for March, scheduled for Wednesday, followed by the Federal Open Market Committee (FOMC) meeting minutes, will be closely monitored. These events are expected to impact short-term USD price dynamics and could provide significant momentum for gold.
Recent developments, including upbeat US jobs data and hawkish comments from Federal Reserve officials, have prompted investors to revise down their expectations for the number of rate cuts in 2024, which could constrain gains for gold. Comments from Chicago Fed President Austan Goolsbee and Minneapolis President Neel Kashkari highlighted the strength of the US economy and concerns about inflation, respectively, influencing market sentiment.
Investors are currently estimating a nearly 50% chance that the Fed will maintain the policy rate unchanged in June, contributing to higher yields on the benchmark 10-year US government bond. Elevated US Treasury bond yields typically bolster the US Dollar and could exert downward pressure on gold prices, although ongoing geopolitical tensions may continue to provide some support.
Amidst reports of a potential ground offensive in Gaza and tempered hopes for a ceasefire, geopolitical uncertainties persist, further contributing to the complex market dynamics.
In summary, the upcoming release of the US Consumer Price Index (CPI) and the FOMC meeting minutes are anticipated to provide clarity on the Fed’s rate-cut trajectory, thereby influencing the direction of XAU/USD trading.
Gold: Gold Rush Propels Prices to Peak; Related Assets Surge
The Gold prices are flying high after the Iran threatened military troops against Israel for its embassy attacked in Syria. Israel and Hamas ceasefire talks under the progress. Fed Members said inflation is still above 2% target and labour market tightened in the US economy. So June month rate cut bets also faded by the economists view, So Gold prices are moving higher against USD.
XAUUSD is moving in Ascending channel and market has fallen from the higher high area of the channel
Over the past month, spot gold prices have experienced a notable rally, reaching an all-time high of $2,350 per ounce on Monday. Concurrently, gold futures also surged to unprecedented levels.
The COMEX, a leading US futures and options market, witnessed its most actively traded gold futures peak at $2,372.5 per ounce. This record-setting achievement followed the remarkable ascent of the yellow metal over the previous month, with gains approaching nearly 10 percent, marking its most robust performance in the past three years, as reported by the Xinhua News Agency.
In tandem with the global surge in gold prices, various domestic assets linked to the precious metal have also witnessed significant climbs. According to insights from market observer Wind, among 16 mutual funds boasting a return rate of over 20 percent year-to-date, three gold funds secured top positions.
Furthermore, the A-share market observed approximately 11 gold-related stocks, including prominent names like Zijin Mining and Shandong Gold Group, exhibiting year-to-date gains exceeding 12 percent.
Wang Lixin, CEO of the World Gold Council (China), highlighted market expectations of interest rate cuts by the US Federal Reserve as a pivotal factor fueling the substantial increase in gold prices. Wang explained that such rate cuts typically lead to a decline in US Treasury yields, prompting investors to seek alternative wealth storage options like gold, thereby driving up its prices. Additionally, lower interest rates tend to weaken the US dollar, reducing the cost of investing in gold for international buyers.
Moreover, Wang noted a significant increase in long positions on major futures markets, including the COMEX, attracting more investors to the gold market.
Despite the customary onset of the gold sales offseason post the Spring Festival, this year has witnessed sustained demand for both gold investment products and jewelry in China, owing to the prolonged period of high gold prices.
The resilience of the gold sector has extended to India as well, another major gold-consuming nation, providing substantial support to the global gold market amidst geopolitical conflicts. Central banks worldwide have continued to bolster their gold reserves, further bolstering the precious metal’s prices.
According to the World Gold Council (WGC), central bank demand, a crucial driver of gold demand, has consistently exceeded 1,000 metric tons annually for the past two years. China emerged as the largest single gold buyer last year, followed by Poland.
The People’s Bank of China revealed that the country’s central bank has been augmenting its gold reserves for 17 consecutive months since November 2022, with reserves surpassing 72.7 million ounces by the end of March.
Cao Liulong, chief strategist at Founder Securities, attributed the recent surge in gold prices to accelerated deglobalization, which has intensified concerns about dollar credit, acting as a catalyst for gold’s upward trajectory. Cao suggested that the world may transition into an era without a single reserve currency, potentially fueling a decade-long bull run for gold.
However, some experts caution that gold prices may encounter challenges amid a strengthening greenback and other macroeconomic headwinds. Huang Lichen, an analyst at WolFinance Technology, pointed out that while investors anticipate Fed rate cuts, recent economic indicators from the United States indicating improved performance have bolstered the US dollar, exerting pressure on gold prices.
Xiong Yuan, chief economist at Guosheng Securities, noted that gold often experiences a round of corrections shortly after reaching new highs, with current long positions appearing crowded, suggesting a short-term risk of pullback. Nonetheless, the medium- and long-term outlook for gold prices remains bullish.
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