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Gold glitters again after losses on Friday

Tuesday, June 06, 2023

Today’s headlines

What’s happening: Gold settled higher on Monday, recovering some of its losses from last week.

What happened: The US dollar remaining stable lent support to the yellow metal, which started the week on a positive note.

A decline in a key US economic data also had traders adding more gold to their portfolios.

Why it matters: Gold had settled Friday’s session in the red, after investor risk appetite improved on better-than-expected US NFP (nonfarm payrolls) data. All eyes had been on the US due to fears around the government’s debt debacle.

Gold started Monday’s trading in the red but gradually made gains through the session as the US dollar steadied. Strength in the US dollar generally makes dollar-denominated assets, including gold, more expensive for foreign currency users.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell slightly to 104.00 on Monday.

Data released by the US also supported the safe-haven metal. The ISM services index fell to a five-month low of 50.3 in May, from 51.9 in the prior month, while new orders for manufactured goods rose lower than projected. The S&P Global services PMI for the US also declined to 54.9 in May, versus a preliminary reading of 55.1.

Despite the gains on Monday, gold remained significantly below its record high of $2,050 on May 5, with markets expecting interest rates in the US, EU and UK to remain elevated for some time to come.

Gold for August delivery gained $4.70, or 0.2%, to settle at $1,974.30 an ounce on Comex, while July silver declined 11 cents to close at $23.64 an ounce on Monday.

July platinum climbed $32.9 to $1,036.4 an ounce, while September palladium gained around $7 to $1,410.30 an ounce and July copper rose 4 cents to $3.77 a pound.

What to watch: Traders will continue monitoring comments from US Federal Reserve officials for signs of the central bank’s next move, amid growing speculations of a rate hike of 25 bps at the June meeting.

The markets today

European stocks will be in focus today ahead of a basket of economic reports

Context: European markets settled lower on Monday following the release of economic data.

Details: The European Stoxx 600 index recorded gains of around 1.5% last week, after hitting a two-month low on Wednesday, as investors cheered news of US lawmakers passing a bill to raise the government’s debt ceiling.

However, the European index started the new week on a negative note, with most sectors closing in the negative zone on Monday.

Investors are still assessing the impact of inflation data released on Thursday, which showed Eurozone’s inflation levels easing to their lowest since February 2022. However, ECB President Christine Lagarde said the 6.1% reading was still “too high.”

More economic data came in on Monday, supporting investor sentiment. Eurozone’s producer price inflation fell to 1.0% year-over-year in April, versus the previous month’s 5.5%. The HCOB Eurozone services PMI declined to 55.1 in May, from a preliminary reading of 55.9, while composite PMI was also revised lower to 52.8 in May.

The STOXX Europe 600 Index fell 0.48% to close at 459.93 on Monday in a largely muted trading session. London’s FTSE 100 fell 0.10% to 7,599.99, while Germany’s DAX 40 and France’s CAC 40 lost 0.54% and 0.96%, respectively.

What are expectations: Investors will watch economic data on construction PMI, retail sales and ECB consumer expectation survey from the Eurozone today. Analysts expect the HCOB Eurozone construction PMI to rise to 45.8 in May, from 45.2 in April. Retail sales, which had contracted 1.2% in March, are likely to grow 0.3% in April.

Other Markets: US trading indices closed mostly lower on Monday, with the Dow Jones and S&P 500 down by 0.59% and 0.20%, respectively, and the Nasdaq 100 up by 0.07%.

The news shaping the markets

Ukraine’s President Volodymyr Zelenskyy and UK’s Foreign Secretary James Cleverly discussed preparations for a NATO summit next month. The news sent the safe-haven US dollar index lower this morning.


UK’s retail sales grew by 3.7% year-over-year in May, versus a 5.2% surge in April, lending support to the GBP/USD forex pair.


Japan’s average cash earnings rose by 1% year-over-year in April, versus a 1.3% rise in the prior month, which sent the JPY/USD pair higher in forex trading this morning.


Australia’s private house approvals fell by 3.8% to 7,939 units in April, exerting pressure on the AUD/USD forex pair.


The Philippines reported a decline in its annual inflation rate to 6.1% in May, from 6.6% in the prior month, which sent the PHP/USD pair higher in forex trading this morning.

What else to watch today

Germany’s factory orders and construction PMI, Spain’s industrial production, France’s construction PMI and new passenger car registrations, Italy’s construction PMI, UK’s construction PMI, South Africa’s GDP growth rate, Russia’s total vehicle sales, Mexico’s auto exports and car production, Canada’s value of building permits and Ivey Purchasing Managers Index, US Redbook index, IBD/TIPP economic optimism index, Logistics Manager’s Index and API crude oil stock change, as well as Brazil’s auto production and new vehicle sales.


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