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Thursday, June 01, 2023

Today’s headlines

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

What happened: The safe-haven metal reversed its downward trajectory, after recording losses for three consecutive weeks.

Although gold rose on Wednesday, it still recorded its first monthly decline in three months.

Why it matters: Gold came under pressure as May progressed, after having surged by more than $400 per ounce since its October 2022 lows.

US Treasury yields declined after President Joe Biden and House Speaker Kevin McCarthy reached an agreement to increase the debt ceiling. A decline in US Treasury yields typically lends support to gold. The yield on the 10-year note fell to around 3.643% on Wednesday.

The Chicago PMI data released on Wednesday hurt risk sentiment and had investors adding more gold to their portfolios. The Chicago PMI crashed to 40.4 points in May, from 48.6 in the previous month. The figure also came in well below market expectations of 47.

However, gold pared gains after the release of strong jobs data by the US. The number of job vacancies in the US rose by 358,000 in April, while the number of people quitting jobs declined by 49,000.

Strength in the US dollar also limited the overall gains for gold on Wednesday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.2% to 104.33, reaching its strongest level since March.

Gold futures for August delivery gained $5, or 0.3%, to close at $1,982.10 per ounce on Comex. The yellow metal closed at its highest level since May 24 but still recorded a monthly loss for the first time since February, down around 1.8% in May.

Silver futures for July delivery surged 1.5% to $23.59 per ounce on Wednesday. The white metal settled lower by around 6.5% for the month after recording two straight months of gains.

Palladium futures for September declined by $38.50 to $1,359 per ounce, while platinum for July delivery fell by $22.90 to $999 per ounce. Copper for July delivery fell 3 cents to $3.64 per pound, down around 6.5% for the month.

What to watch: Traders will watch developments on the US debt deal, with both chambers of the Congress ready to vote.

Markets will also monitor comments from Federal Reserve officials to predict whether the central bank will hike interest rates at its June meeting.

The markets today

European stocks will be in focus today ahead of a basket of economic reports

Context: European equities closed lower on Wednesday, as investors assessed economic data and development around the US debt ceiling.

Details: US President Joe Biden and House Speaker Kevin McCarthy reached a preliminary agreement on the debt ceiling over the weekend. The House passed the bill on Wednesday and sent it to the Senate, which needs to announce its decision before Monday.

France’s consumer price inflation eased to 5.1% year-over-year in May, from 5.9% a month ago. The figure was also better than market estimates of 5.5%. The country’s economy grew by 0.2% in the first quarter, versus a flat reading in the prior quarter.

Germany’s consumer price inflation also eased to 6.1% in May, from 7.2% in the earlier month and better than market estimates of 6.5%.

The STOXX Europe 600 Index declined by 1.07% to close at 451.76 on Wednesday, with all sectors closing in the negative zone. Auto stocks were among the worst performers, down around 2.5%.

London’s FTSE 100 fell 1.01% to close at 7,446.14 on Wednesday, while Germany’s DAX 40 and France’s CAC 40 declined by 1.54% each.

What are expectations: Investors await economic reports on manufacturing PMI, unemployment rate and inflation rate from the Eurozone today. The HCOB flash manufacturing PMI for the Eurozone is expected to decline to 44.6 in May, from 45.8 in the prior month.

The seasonally adjusted unemployment rate is projected to remain unchanged at 6.5% in April. Analysts expect the Eurozone’s consumer price inflation to ease to 6.5% in May, from 7% in April.

Other Markets: US trading indices closed lower on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.41%, 0.61% and 0.70%, respectively.

The news shaping the markets

Drone attacks on Russian oil refineries close to the important Black Sea oil export terminals grabbed the headlines, lending support to the safe-haven US dollar index.


Australia’s private new capital expenditure on equipment, plant and machinery rose by 3.7% during the first quarter, following a 0.6% rise in the prior period. The news lent support to the AUD/USD forex pair.


China’s Caixin general manufacturing PMI improved to 50.9 in May, from 49.5 a month ago, sending the CNY/USD pair higher in forex trading this morning.


Japan’s au Jibun Bank manufacturing PMI slipped to 50.6 in May, versus a flash reading of 50.8, exerting pressure on the JPY/USD forex pair.


South Korea’s S&P Global manufacturing PMI rose to 48.4 in May, from 48.1 in the prior month. However, the country’s manufacturing sector remaining in the contraction zone sent the KRW/USD pair slightly lower in forex trading this morning.

What else to watch today

Germany’s retail sales and manufacturing PMI, Russia’s manufacturing PMI, Australia’s Commodity Prices and CoreLogic home value index, France’s government budget value, new passenger car registrations and manufacturing PMI, Spain’s Tourist arrivals, new car sales and manufacturing PMI, Turkey’s manufacturing PMI, foreign exchange reserves and MPC meeting summary, Italy’s manufacturing PMI, unemployment rate and new passenger car registrations, UK’s manufacturing PMI, mortgage lending, mortgage approvals, consumer credit, net lending to individuals and Nationwide house price index, South Africa’s manufacturing PMI and total vehicle sales, Mexico’s business confidence indicator, foreign exchange reserves, manufacturing pmi and monetary policy meeting minutes, US Challenger job cuts, ADP employment change, initial jobless claims, continuing claims, unit labour costs, ISM manufacturing PMI, construction spending, nonfarm business sector labour productivity, manufacturing PMI, natural gas stocks change, gasoline inventories, crude oil inventories and distillate stocks, Brazil’s GDP growth rate, manufacturing PMI, government revenues and balance of trade, as well as Canada’s manufacturing PMI.


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