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What’s happening: Gold recorded gains on Friday, after three straight sessions of losses.
What happened: Gold remained under pressure through the week, despite concerns around the global economy and debt ceiling in the US.
The yellow metal rebounded on Friday amid weakness in the US dollar.
Why it matters: The US dollar climbed through the week, with rising Treasury yields, making gold less attractive for holders of foreign currency. The US dollar index, which measures the greenback’s performance versus a basket of major peers, breached its 50-day and 100-day moving averages last week.
A reversal in trend by the greenback on Friday lent support to gold prices. The US dollar index fell 0.5% to 103.04 on Friday but ended the week with gains of 0.4%.
Comments from Federal Reserve Chairman Jerome Powell also provided support to gold prices on Friday. Powell said that bringing inflation back to the central bank’s 2% goal will take time, although policymakers had not made any decision regarding whether to hike interest rates at the June meeting.
Gold prices were also boosted by renewed concerns around the stability of the banking sector. Shares of regional lenders in the US moved lower after US Treasury Secretary Janet Yellen said more mergers may be necessary after the failures of some banks.
Gold futures for June delivery climbed $21.80, or 1.1%, to close at $1,981.60 per ounce. The yellow metal ended the week down 1.9%, recording its biggest weekly percentage decline since the week ended February 3.
Silver futures for July delivery added 1.8% to settle at $24.06 per ounce, down 0.4% for the week. June palladium climbed 5.1% to $1,523.80 per ounce, recording a weekly gain of 0.7%.
Platinum for July delivery gained around 1.7% to $1,075.70 per ounce, up 0.8% for the week. Copper for July delivery surged about 1.2% to $3.73 per pound, notching a weekly gain of around 0.1%.
What to watch: Traders will watch movements in the US dollar. The release of the US non-farm payrolls (NFP) data, due on June 2, will also remain in focus.
Context: Bitcoin prices remained below the $27,000 mark, following remarks from US Federal Reserve Chairman Jerome Powell.
Details: Powell said that the ongoing concerns in the banking sector could force the Federal Reserve to slow its rate hike initiatives to combat inflation.
Powell mentioned that the developments in the banking sector “are contributing to tighter credit conditions and are likely to weigh on economic growth, hiring and inflation,” due to which the central bank’s benchmark interest rate “may not need to rise as much as it would have otherwise to achieve our goals.”
Markets widely expect the US Federal Reserve to keep interest rates unchanged at its upcoming policy meeting in June. There are also speculations of rate cuts as the year progresses.
Although Bitcoin managed to breach the $27,000 level on Friday, it could not hold onto gains and slipped closer to around $26,800. Ethereum hovered above the $1,800 mark.
What are expectations: Traders will continue monitoring comments from Fed officials for any indication of whether the central bank will continue with monetary tightening. Developments around the banking sector will also remain in focus.
Other Markets: European indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and Stoxx 600 index up by 0.19%, 0.69%, 0.61% and 0.66%, respectively.
Ukraine President Volodymyr Zelensky said Russia had not yet occupied Bakhmut, after Moscow said a mercenary group had control of the same. Despite the ongoing concerns, the safe-haven US dollar index fell slightly lower this morning.
Japan’s core machinery orders fell 3.9% in March, improving from the 4.5% decline in the previous month and lending support to the JPY/USD forex pair.
Canada’s retail sales are likely to grow 0.2% in April, according to a preliminary reading. The news sent the CAD/USD pair higher in forex trading this morning.
Mexico’s retail sales rose by 2.5% year-over-year in March, easing from the 3.4% growth in the previous month. The figure also missed missing market expectations of 2.9% growth, exerting pressure on the MXN/USD forex pair.
The People’s Bank of China held its key lending rates steady for the ninth consecutive month, sending the CNY/USD pair lower in forex trading this morning.
Turkey’s consumer confidence index and government debt, Eurozone’s Construction output and consumer confidence indicator, as well as Central Bank of Brazil’s focus market readout.
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