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What’s happening: Gold prices recorded gains on Friday, as investors assessed the latest economic reports.
What happened: Gold closed at its strongest level in three weeks on Friday, as soft economic data from the US fuelled more speculations of rate cuts by the Federal Reserve.
Although gold prices are lower than the record high hit on April 19, they are still sharply higher year-to-date.
Why it matters: Data released on Friday showed the University of Michigan’s consumer sentiment index declining steeply to 67.4 in May, from 77.2 in the earlier month. The figure was significantly lower than market expectations of a reading of 76.
The US Labor Department, said on Thursday that initial jobless claims rose by 22,000 to 231,0000 in the week ending May 4. This marked the highest level of jobless claims since August 2023.
These weak economic reports from the US raised speculations of the Federal Reserve announcing interest rate cuts of 25 basis points at its July meeting.
Some strength in the US dollar limited the overall gains for gold, as a higher greenback makes metals more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, added around 0.1% to reach 105.31 on Friday.
Gold for June delivery rose $34.70, or 1.5%, to close at $2,375 an ounce on Comex. The yellow metal gained 2.9% last week to reach close to the record high settlement reached on April 19. Gold prices had surged to an all-time high of $2,413.80 on April 19 and are currently trading less than 2% below the record high. The yellow metal has gained around 14.6% year-to-date.
In other metals trading, silver for July delivery rose 14 cents to settle at $28.51 per ounce. July copper added 7 cents to $4.66 per pound. Platinum settled at $1,007.2, while palladium closed at $981.70.
What to watch: Investors await the release of inflation data from the US this week, which is expected to impact the Fed’s rate decision and provide direction to gold prices ahead. Data on PPI will be released on Tuesday, while the CPI report is scheduled for Wednesday.
Producer prices in the US, which rose 2.1% year-over-year in March, are expected to increase by 2.2% in April. The annual inflation rate in the US, which accelerated for a second consecutive month to 3.5% in March, is expected to ease to 3.4% in April.
Context: The CAD/USD forex pair edged higher on Friday, following the release of jobs data from Canada.
Details: Data released on Friday showed a higher-than-expected rise in domestic jobs in April, which tempered prospects of rate cuts by the Bank of Canada.
Canada’s economy added 90,400 jobs in April, the most in 15 months, compared to a 2,200 decline in the previous month. The latest reading came in well above market estimates of 18,000 job adds. The unemployment rate in Canada remained at the previous month’s two-year high level of 6.1% in April. However, this was below market estimates of 6.2%.
Also, Canadia’s business confidence surged to a two-year high of 63, topping market expectations and signalling upbeat private sector sentiment.
Traders widely expect the Bank of Canada to cut its benchmark interest rate at its policy meeting on June 5.
Weakness in the price of crude oil, one of Canada’s major exports, limited the overall gains for the loonie. WTI crude oil for June delivery declined $1 to close at $78.26 per barrel on Friday.
The CAD/USD rose 0.04% to 1.3673 on Friday. The forex pair ended the week with gains of around 0.1%. The S&P/TSX Composite index fell by 0.3% to settle at 22,308.93 on Friday, after hitting a record high of 22,443 earlier in the session.
What to watch: Investors await the release of economic data on building permits from Canada today. The total value of building permits in Canada, which surged by 9.3% to $11.8 billion in February, is expected to decline by 4.6% in March.
Other Markets: European indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.63%, 0.46%, 0.38% and 0.77%, respectively.
Russian President Vladimir Putin replaced Sergei Shoigu as secretary of the country’s Security Council. The news sent the RUB/USD pair higher in forex trading this morning.
Australia’s NAB business confidence index came in unchanged at 1 in April. The figure remaining below the long-run average exerted pressure on the AUD/USD forex pair.
Ireland’s BNP Paribas Real Estate Construction PMI rose to 53.2 in April, from 51.6 in the earlier month, sending the EUR/USD pair slightly higher in forex trading this morning.
New Zealand’s BusinessNZ Performance of Services Index declined to a new 27-month low of 47.1 in April, from 47.2 in the prior month, which exerted pressure on the NZD/USD forex pair.
China’s annual inflation rate accelerated to 0.3% in April, from March’s reading of 0.1%. This sent the CNY/USD pair lower in forex trading this morning.
Turkey’s current account and retail sales, India’s consumer price index, Germany’s current account, Brazil’s industrial entrepreneur confidence index and Central Bank of Brazil focus market readout, US consumer inflation expectations, as well as China’s vehicle sales and current account.
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