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Gold continues to shine amid geopolitical worries

Friday, April 19, 2024

Today’s headlines

What’s happening: Gold prices gained on Thursday amid heightened geopolitical concerns.

What happened: Prices for the yellow metal climbed even after the US released strong economic reports, which typically reduces the demand for safe-haven assets.

Gold prices settled higher despite strength in the US dollar during Thursday’s session.

Why it matters: Data released from the US on Thursday showed the number of people claiming jobless benefits coming in unchanged from the earlier week at 212,000 in the week ending April 18. The figure was better than market expectations of a higher reading of 215,000. Continuing claims were also unchanged at 1,812,000 at the beginning of the month, below market estimates of 1,818,000.

The US Philadelphia Fed Manufacturing Index gained 12 points to a reading of 15.5 in April. This also topped estimates of 1.5. Existing home sales in the country fell 4.3% to an annualised rate of 4.19 million units in March due to elevated interest rates. This followed a 9.5% surge in February but was almost in-line with market estimates of 4.2 million.

Strong economic data from the US, hawkish comments from Federal Reserve officials and sticky inflation have raised prospects that the central bank delaying interest rate cuts this year.

Traders now expect the Fed to start cutting interest rates in September, compared to the earlier projected of in June. Higher interest rates generally lower the appeal of holding the non-yielding bullion.

Gold recorded gains despite strength in the greenback. The US dollar index, which measures the greenback’s performance versus a basket of major peers, added 0.2% to reach 106.15 on Thursday, inching closer to this week’s five-and-a-half month high of 106.51 recorded on Tuesday. The US dollar index has added around 4.5% year-to-date.

Gold for June delivery gained $9.60 to close at $2,398 per ounce on Thursday.

In other metals trading, silver for May delivery lost 2 cents to settle at $28.38 per ounce. May copper gained 10 cents to $4.44 per pound, while platinum surged to $954.5 and palladium settled higher at $1,038.50.

What to watch: Investors will continue monitoring geopolitical tensions, which have been responsible for the surge in safe havens. Any further escalation in tensions could result in gold prices surging beyond the $2,600 in 2024.

Markets will also watch the US dollar and purchases of gold by major central banks.

The markets today

European stocks will be in focus today ahead of Germany’s producer price inflation data

Context: European equity markets settled slightly higher on Thursday, as investors monitored the European Central Bank’s monetary policy outlook.

Details: European stocks moved higher on Thursday, trimming losses recorded earlier during the week amid strong corporate results.

ECB policymaker François Villeroy de Galhau indicated an interest rate cut in June.

On the economic data front, construction output in the Eurozone fell by 0.4% year-over-year in February, compared to a 0.3% decline a month ago. This marked a downturn in the construction sector for the second straight month. The current account surplus in the Eurozone rose significantly to €31.6 billion in February, versus a year-ago surplus of €10.7 billion. Passenger car registrations in the European Union fell 5.2% year-over-year to 1 million units in March, versus a 10.1% gain recorded a month earlier.

The STOXX Europe 600 Index rose 0.24% to settle at 499.70 on Thursday. Banking stocks were among the top performers, gaining around 1.6% during the session, while oil and gas shares tumbled around 1.5%.

Airline stocks moved higher on Thursday after easyJet reported stronger-than-expected results. Shares of ABB also spiked on upbeat profits for the first quarter.

London’s FTSE 100 index gained 0.37% to settle at 7,877.05 on Thursday. Germany’s DAX 40 rose 0.38% to 17,837.40, while France’s CAC 40 added 0.52% to close at 8,023.26.

What to watch: Investors await the release of economic data on producer price inflation from Germany today. Producer prices in Germany, which fell by 4.1% year-over-year in February, are expected to decline by 4.2% in March.

The release of services and manufacturing PMIs data from the Eurozone, due to be released next week, will also remain in focus.

Other Markets: US trading indices closed mixed on Thursday, with the S&P 500 and Nasdaq 100 down by 0.22% and 0.57%, respectively, and the Dow Jones index up by 0.06%.

The news shaping the markets

Ukraine urged the US Congress to pass its long-stalled aid bill, warning of World War III if it loses its war with Russia. The news sent the safe-haven US dollar index higher in forex trading this morning.


Japan’s annual inflation rate eased to 2.7% in March, from February’s 2.8%. The figure also came in-line with market estimates, lending support to the JPY/USD forex pair.


Colombia’s leading economic indicator rose to 2.49% year-over-year in February, versus the earlier month’s 1.6% gain. However, the COP/USD fell in forex trading this morning.


South Africa’s value for building plans passed in larger municipalities dipped 17.6% year-over-year to R 8.08 billion in February, which exerted pressure on the ZAR/USD forex pair.


Hong Kong’s unemployment rate increased to 3% in the three months ending March, from 2.9% in the prior period. However, the HKD/USD pair fell slightly in forex trading this morning.

What else to watch today

UK’s retail sales volumes, Italy’s construction output, Spain’s balance of trade and consumer confidence indicator, India’s value of loans, deposit growth, foreign exchange reserves, total passenger vehicle sales and monetary policy meeting minutes, Mexico’s retail sales, US Baker Hughes crude oil rigs and Baker Hughes total rigs, as well as Turkey’s total motor vehicles production, government debt and foreign exchange reserves.


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