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What’s happening: Gold prices moved higher on Monday, after being on a downtrend for six consecutive trading days.
What happened: A decline in the US dollar lent support to the yellow metal at the start of the week.
Rising geopolitical concerns following Donald Trump’s win in the US Presidential election also boosted demand for the safe-haven metal.
Why it matters: Gold prices recorded their steepest weekly decline in over three years last week, following Donald Trump’s US Presidential election win. This is because Trump’s proposed tariffs are expected to result in higher inflation in the US, preventing the Federal Reserve from pursuing aggressive interest rate reductions.
Speculations of a slowdown in the Fed’s interest rate cuts provided a boost to the US dollar last week. The US dollar index, which measures the greenback’s performance versus a basket of major peers, surged to a one-year high on Thursday. After climbing 1.6% last week, the world’s most traded currency gave up some gains on Monday, declining around 0.4%, due to some profit taking.
Weakness in the US dollar generally makes metals, including gold, cheaper for foreign currency holders.
Data from the Labor Department released last week showed the US consumer price index rising 0.2% in October. This marked the fourth month in a row of acceleration in inflation, mainly due to higher shelter costs. The CPI added 2.6% in the 12 months through October.
US gold futures surged 1.7% to close at $2,614.60 per ounce on Monday.
In other metals trading, silver jumped to $31.224 an ounce, platinum spiked to $974.5 and palladium surging more than 5% to $1,008.20 during Monday’s session.
What to watch: Investors will watch major economic releases, including weekly jobless claims, services and manufacturing PMIs from the US, to be published later this week.
The performance of the US dollar will also remain in focus and markets will monitor comments from Fed officials this week.
Context: Equity markets in Europe closed slightly lower on Monday, extending last week’s losses.
Details: Investors assessed comments from ECB (European Central Bank) officials regarding their monetary policy moves. Markets widely expect the ECB to continue with interest rates cuts, although the US Federal Reserve seems ready to stall.
European markets had closed lower on Friday, with the pan-European Stoxx index falling for the fourth straight week on weak corporate earnings reports and concerns over the impact of Donald Trump’s policies.
The STOXX Europe 600 Index slipped 0.06% to close at 502.84 on Monday. Retail stocks recorded losses, falling around 0.9%, while miners gained about 0.6% on Monday.
European tech stocks also settled lower, ahead of Nvidia’s earnings call. The tech giant’s results, due for release on Wednesday, could set the direction of the stock market in the near term.
Shares of Melrose Industries rose around 7% on Monday, after the company reported 7% revenue growth in the four-month period ended October 31. Fugro’s shares climbed around 6% after the company announced a €50 million share buyback plan.
Germany’s DAX 40 fell 0.11% to 19,189.19 on Monday. However, France’s CAC 40 rose 0.12% to settle at 7,278.23 and London’s FTSE 100 gained 0.57% to close at 8,109.32.
What to watch: Investors await the release of economic data on current account, inflation rate and labour costs from the Eurozone today. The current account surplus in the Eurozone, which widened to €35.2 billion in August from €26.8 billion in the year-ago period, is expected to narrow to €33 billion in September.
Analysts expect Eurozone’s annual inflation to accelerate to 2% in October, from 1.7% in the previous month, while hourly labour costs are projected to increase by 4% year-over-year in the third quarter, compared to a 4.7% rise in the second quarter.
Other Markets: Asian indices traded higher this morning, with the Nikkei 225, Shanghai Composite Index and Hang Seng Index up by 0.12%, 0.03% and 0.63%, respectively.
Outgoing US President Joe Biden has allowed Ukraine to use long-range American missiles to strike inside Russia. The news sent the RUB/USD pair slightly lower in forex trading this morning.
Sri Lanka’s services PMI surged to 60.3 in October, from 53.4 in the previous month, lending support to the LKR/USD forex pair.
Colombia’s gross domestic product grew by 2% year-over-year in the third quarter. Although this marked a slight deceleration from the 2.1% surge recorded in the second quarter, it sent the COP/USD pair higher in forex trading this morning.
Canada’s housing starts rose by 7.8% to 240,761 units in October, the strongest level in three months. The latest reading still fell short of market estimates of 242,500 units, exerting pressure on the CAD/USD forex pair.
US NAHB/Wells Fargo housing market index climbed to 46 in November, from 43 in October. The latest reading being the highest in seven months sent the Nasdaq 100 higher by more than 100 points on Monday.
Italy’s current account, Canada’s inflation rate, US building permits, housing starts and Redbook index, as well as Spain’s consumer confidence indicator.
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