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What’s happening: Gold prices recorded gains on Monday, hitting a fresh record high during the session.
What happened: Growing speculations of the US Federal Reserve cutting interest rates up to three times this year has lent support to the safe-haven metal.
Demand for gold from several major central banks and geopolitical concerns also provided a boost to the yellow metal on Monday.
Why it matters: Central banks continue to add gold to their reserves this year, with Turkey, India and Kazakhstan leading in the purchases. China’s central bank also said it added 160,000 troy ounces of gold to its reserves last month.
Most traders were expecting the Fed to cut interest rates in June. However, data released on Friday showed higher-than-expected job adds in March, which raised speculations of the US central bank delaying its first rate cut. Lower interest rates lower the opportunity cost of holding gold, boosting demand.
The US economy added 303,000 jobs in March, the most in ten months, versus 270,000 job adds in February. The latest reading also surpassed market estimates of 200,000 job adds. The unemployment rate in the US eased to 3.8% in March, from the previous month’s two-year high of 3.9%.
Gold for June delivery gained $5.60 to settle at $2,351 per ounce on the NYMEX (New York Mercantile Exchange) on Monday, after surging to a fresh high of $2,372.5 earlier in the session. Gold prices have surged around 4% over the previous week and added approximately 14% year-to-date.
Silver imports by India also grew to a record high in February, with lower duties resulting in higher purchases from the UAE.
Silver for May delivery climbed 30 cents to close at $27.81 per ounce but remained well below its 2011 high of $48.60.
In other metals trading, May copper added 4 cents to $4.28 per pound on Monday. Platinum gained sharply to $974.50, while palladium settled higher at $1,050.50.
What to watch: Investors await the release of US consumer inflation report and minutes from the recent FOMC (Federal Open Market Committee) meeting.
The annual inflation rate in the US, which rose to 3.2% in February, is expected to accelerate further to 3.4% in March.
Context: US equity markets settled slightly lower on Monday, as investors digested the uptick in Treasury yields.
Details: US stocks closed lower last week, with the Dow Jones index recording its worst weekly performance since March 2023. The S&P 500 also lost around 1% last week, logging its biggest weekly decline since early January.
However, markets recovered slightly on Friday, following the release of the US NFP (nonfarm payrolls) data for March, which showed higher-than-expected job adds.
Wall Street started the new week on a cautious note due to an increase in Treasury yields. The benchmark 10-year Treasury yield added 5 basis points to 4.43% during the session.
Investors were also avoiding big moves ahead of the start of the Q1 earnings season, with JPMorgan Chase, Citigroup and Wells Fargo set to report their quarterly reports on Friday.
The Dow Jones index fell 11.24 points, or 0.03%, to close at 38,892.80, while the S&P 500 fell 0.04% to settle at 5,202.39 and the Nasdaq 100 lost 0.05% to close at 18,100.19 on Monday.
What to watch: Investors await the release of economic reports on NFIB small business optimism index and RCM/TIPP economic optimism index from the US today. The NFIB Small Business Optimism Index in the US, which fell to 89.4 in February, is expected to rise to 90.2 in March. Analysts expect the RealClearMarkets/TIPP economic optimism index to increase to 44.2 in April, from 43.5 in March.
Other Markets: European indices closed higher on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.41%, 0.79%, 0.72% and 0.47%, respectively.
Ukraine President Volodymyr Zelensky said that the country “will lose” the war if the US Congress does not give its approval to military aid. The news sent the safe-haven US dollar index slightly lower in forex trading this morning.
Australia’s NAB business confidence index rose to 1 in March, versus January’s reading of 0, lending support to the AUD/USD forex pair.
UK’s retail sales climbed 3.2% year-over-year in March. This being the strongest growth rate since August 2023 sent the GBP/USD pair higher in forex trading this morning.
The Bank of Israel held the policy rate at 4.5% for the second straight meeting, which lent support to the ILS/USD forex pair.
Chile’s trade surplus shrank to $1,770 million in March, from $2,478 million in the year-ago period, which sent the CLP/USD pair lower in forex trading this morning.
Japan’s machine tool orders, France’s balance of trade, current account, US Redbook index and API crude oil stock change, Mexico’s inflation rate, Saudi Arabia’s industrial production, China’s new yuan loans, money supply M2, outstanding yuan loans and total social financing, Central Bank of Brazil’s focus market readout, as well as Argentina’s industrial production.
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