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Trends & Analysis
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Thursday, October 12, 2023

Today’s headlines

What’s happening: Gold prices moved higher on Wednesday, amid a decline in US Treasury yields.

What happened: Prices for the yellow metal surged to near two-week highs on Wednesday.

Investors also responded to higher-than-expected PPI data from the US by increasing safe-haven buying.

Why it matters: US Federal Reserve officials issued dovish remarks on Wednesday, which signalled a peaking of interest rates.

Atlanta Fed Bank Chief Raphael Bostic said the central bank may not increase rates further, while Federal Reserve Bank of Minneapolis President Neel Kashkari stated that it is “possible” that no more rate hikes will be required.

Benchmark 10-year US Treasury yields eased to 4.5665% on Wednesday, retreating from its highest levels since 2007 recorded last week. Lower rates exert pressure on the US dollar, which in turn raises the appeal for the bullion.

The greenback fell to around a two-week low on Wednesday, following a decline in US Treasury yields. The US dollar rebounded later in session. The US dollar index, which measures the greenback’s performance versus a basket of major peers, ended the trading session almost flat at 105.82 on Wednesday.

Producer prices in the US rose 0.5% in September. Although this was higher than the consensus estimate of 0.3%, it marked the lowest growth in three months and followed a 0.7% rise in August.

Gold prices jumped around 1.6% on Monday on rising geopolitical concerns.

Spot gold surged to its strongest level since September 29, while US gold for December delivery added $12 to reach $1,887.30 an ounce on Wednesday.

In other metals trading, silver for December delivery gained 18 cents to $22.13 an ounce, while December copper lost 2 cents to settle at $3.61 a pound. Platinum rose to $893.00 and palladium edged lower to $1,170.30.

What to watch: Investors await the release of inflation data from the US today, which will trigger speculations on the Federal Reserve’s future rate moves. The US inflation rate is expected to edge lower to 3.6% in September, from 3.7% in the prior month.

The markets today

The British pound will be in focus today ahead of a basket of economic reports

Context: The GBP/USD forex pair gained on Wednesday, in what is proving to be a week of heightened volatility.

Details: Ongoing geo-political unrest and a shift in the central bank’s rate hike expectations resulted in heightened volatility in the British pound.

Data showed that British employers had lowered their job vacancies for the first time in over two and half years in September and slashed their hiring. This data is expected to impact the Bank of England’s future rate move.

Traders still see a 50/50 chance of one more interest rate hike by the Bank of England.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, also traded almost flat on Wednesday.

The GBP/USD pair rose around 0.3% to $1.2314 on Wednesday.

London’s FTSE 100 fell 0.11% to close at 7,620.03 on Wednesday, as mining sector settled mostly lower amid a decline in metal prices. The index had gained around 1.8% on Tuesday, driven by oil majors.

What to watch: Investors await the release of economic data on GDP growth, industrial production and balance of trade from the UK today. The British economy, which contracted by 0.5% in July, is expected to grow by 0.1% in August. Analysts expect industrial production in the UK to decline by 0.2% in August, following a 0.7% contraction in July.

UK’s trade deficit, which shrank to £3.446 billion in July, is projected to widen to £3.6 billion in August.

Other Markets: US trading indices closed higher on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.19%, 0.43% and 0.72%, respectively.

The news shaping the markets

Australia’s consumer inflation expectations increased to 4.8% in October, from August’s five-month low of 4.6%, exerting pressure on the AUD/USD forex pair.


Japan’s value of loans rose 2.9% year-over-year in September, down from market estimates of a 3.1% increase, which sent the JPY/USD pair lower in forex trading this morning.


UK’s RICS Residential Market Survey house price balance edged lower to -69 in September, from -68 in the prior month. The figure declining to a new 14-year low exerted pressure on the GBP/USD forex pair.


New Zealand’s annual food inflation eased to 8% in September, from 8.9% a month ago. However, the NZD/USD pair declined in forex trading this morning.

What else to watch today

South Africa’s gold production, mining production, industrial production and SACCI business confidence index, UK’s goods trade balance, manufacturing output and construction output, European Central Bank’s monetary policy meeting accounts, Turkey’s gross foreign exchange reserves, India’s industrial production, retail price inflation and manufacturing production, Mexico’s industrial production and monetary policy meeting minutes, US initial jobless claims, continuing jobless claims, natural gas stocks change, crude oil inventories, gasoline stocks change, distillate inventories and monthly budget statement, Germany’s current account, Russia’s balance of trade, China’s new yuan loans, money supply M2, outstanding loan growth and total social financing, as well as Argentina’s inflation rate and Central Bank of Argentina interest rate decision.


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