Gold rises but is on track to record weekly loss

Today’s headlines

What’s happening: Gold traded higher this morning but remained on course to close the week in the red, after five weeks of gains.

What happened: While elevated geopolitical risks triggered safe-haven buying by investors, recent strength in the US dollar weighed on gold prices.

Concerns around rising inflation due to higher energy costs also prompted investors to scale back speculations of rate cuts by the Federal Reserve.

Why it matters: Middle East tensions intensified, as the US-Iran conflict entered its sixth day. Iran launched multiple series of missiles targeting Israel, while Israel struck Iranian internal security forces. Iran’s drone strikes hit an oil refinery in Bahrain, while a tanker explosion near Kuwait caused an oil spill. Meanwhile, Iran prepared for Ali Khamenei’s funeral.

Gold, which is considered a safe-haven asset, has already surged to multiple record highs this year due to continued economic and geopolitical concerns.

Although the ongoing conflict in the Middle East has raised the demand for safe-haven assets, it also provided a boost to oil prices, raising concerns related to rising inflation. Investors lowered their speculations of the US Federal Reserve cutting its benchmark interest rates anytime soon. Higher central bank interest rates typically lower the demand for non-yielding gold.

Recent data from the US also pointed to strength in economic activity, with lower weekly jobless claims, higher productivity and upbeat growth in the services sector.

Data released on Thursday showed initial jobless claims came in unchanged from the previous week at 213,000 in the last week of February. The figure was better than market estimates of 215,000. Job cuts in the US fell to 48,307 in February from 108,435 in the previous month and down sharply from 172,017 in the year-ago period.

US export prices surged 0.6% in January, topping market estimates of 0.3%, while import prices rose 0.2%. US labour productivity rose 2.8% in the fourth quarter, topping market expectations of 1.9%.

Spot prices for gold rose around 1.1% to $5,135.98 an ounce this morning. The yellow metal remains on track to record losses this week.

In other metals trading, spot prices for silver jumped 2.1% to $83.9525 an ounce, platinum added 1.7% to reach $2,157.55, while palladium rose 1.5% to $1,659.46.

What to watch: Investors will keep an eye on the ongoing tensions in the Middle East, the price of crude oil and movements in the US dollar.

Data on nonfarm payrolls (1730 UAE Time) and retail sales (1730 UAE Time) from the US will be released today. Analysts expect the US economy to add 59,000 payrolls in February, a sharp slowdown from the gain of 130,000 recorded in January. The unemployment rate is expected to remain at 4.3%, while wages are expected to rise 0.3% in February following a 0.4% gain in January. US retail sales, which stalled in December, are expected to decline by 0.3% in January.

The markets today

Costco Wholesale in focus today after releasing its fiscal second-quarter earnings

Context: Shares of Costco fell in extended trading hours on Thursday despite the company posting better-than-expected earnings for the latest quarter.

Details: After topping estimates for the latest holiday quarter, Costo had announced plans to lower prices in case it receives any refunds after the US Supreme Court struck down emergency tariffs imposed by President Donald Trump.

The membership-based retailer had slashed prices on products like textiles and bedding following a reduction in tariffs.

Although the court struck down the emergency tariffs, Trump’s decision to impose temporary import duties has raised concerns for consumer firms, which were already suffering due to a volatile trade environment and increased cost pressures.

Costco has also been investing in its Kirkland Signature brand to attract shoppers looking for budget-friendly options.

Costco’s revenue rose 9.1% year-over-year to $69.60 billion in the fiscal second quarter, beating consensus estimates of $69.29 billion. Earnings came in at $4.58 per share, topping Wall Street expectations of $4.57 per share.

Total comparable sales surged 7.4% year-over-year, rising 5.9% in the US and surging 10.1% in Canada.

How shares responded: Costco’s shares fell 0.2% to $980.29 in after-hours trading following the release of quarterly results. The stock has jumped around 15% year to date.

What to watch: Investors will continue monitoring tariff-related announcements from the Trump administration.

The ongoing situation in the Middle East will also remain in focus as fuel costs and shipping schedules may be impacted.

Other Markets: European indices closed lower on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 1.45%, 1.61%, 1.49% and 1.29%, respectively.

The news shaping the markets

Ukraine’s President Volodymyr Zelensky said that the trilateral peace talks to end the war have been postponed due to the US-Iran war. The news sent the USD/RUB pair lower in forex trading this morning.

Vietnam’s annual inflation rate accelerated to 3.35% in February from 2.53% in the previous month, lending support to the USD/VND forex pair.

Philippines’ manufacturing production rose by 2.7% year-over-year in January. This being a slowdown from the previous month’s 2.8% sent the USD/PHP pair higher in forex trading this morning.

Japan’s foreign reserves surged by $15.95 billion to $1.41 trillion in February. This being the strongest reading since December 2021 exerted pressure on the USD/JPY forex pair.

South Korea’s annual inflation rate came in unchanged from the previous month at 2% in February, below market estimates of 2.1%, which sent the USD/KRW pair lower in forex trading this morning.

What else to watch today

Eurozone’s employment change (1400 UAE Time) and GDP growth rate (1400 UAE Time), Germany’s new car registrations (1500 UAE Time), India’s bank loan growth (1530 UAE Time), deposit growth (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), Brazil’s industrial production (1600 UAE Time), car production (1800 UAE Time) and new car registrations (1800 UAE Time), Russia’s foreign exchange reserves (1700 UAE Time), US used car prices (1800 UAE Time), business inventories (1900 UAE Time), retail inventories (1900 UAE Time), Baker Hughes oil rig count (2200 UAE Time) and Baker Hughes total rigs count (2200 UAE Time), Turkey’s Treasury cash balance (1830 UAE Time), Canada’s Ivey PMI (1900 UAE Time), as well as Argentina’s industrial production (2300 UAE Time).