Gold prices surge to record highs after Powell's remarks
Gold Prices and Market Analysis
- Gold prices surged to record highs, bolstered by bearish remarks from Fed Chair Jerome Powell.
- Expectations of an early Fed interest rate cut in June boosted the appeal of gold futures.
- Gold's surge above $2000 projected estimations of $2300-$2500 price ranges this year by several US banks and institutions.
Price Trends
- Gold prices rose by 1.4% to $2265 an ounce, marking a record high, with a session-low at $2234.
- In the first quarter, gold prices rallied by 7.8%, marking the second quarterly profit in a row.
- In March alone, gold prices climbed by 9.3%, the largest monthly increase since July 2020.
Powell's Remarks
Fed Chair Jerome Powell stated after reviewing inflation data that while numbers align with expectations, the Fed won't react excessively just yet, despite inflation slowing compared to last year. His stance remains consistent with previous statements, indicating no change in the Fed's forecasts of three interest rate cuts this year.
US Interest Rates
- Following Powell's remarks, the probability of a 0.25% Fed interest rate cut in June rose from 59% to 70%.
- Market sentiment still reflects expectations of a total of three Fed interest rate cuts this year, amounting to 75 basis points.
Chinese Gold Demand
China's gold demand has witnessed a significant uptick, particularly led by the People's Bank of China, which has consistently increased its gold reserves for the past 15 months according to data from the Global Gold Council.
Gold Performance Outlook
- JPMorgan's analysts foresee gold prices hitting $2500 an ounce this year.
- Goldman Sachs' analysts project a minimum price target of $2300 an ounce for this year, anticipating policy easing by the Federal Reserve.
Gold holdings at the SPDR Gold Trust remained steady on Thursday at 830.15 tonnes, marking the lowest level since March 13.
Dollar hovers near six-week high ahead of consumer spending data, Powell's remarks
Dollar Strengthens Amid Declining Rate Cut Odds
The dollar rose in European trade on Friday against a basket of major rivals, maintaining gains for the fourth straight session near six-week highs as the odds of a June Fed interest rate cut decline.
Now investors await important US personal spending data later today, in addition to Fed Chair Jerome Powell’s speech.
Greenback's Quarterly Profit
The greenback is heading for the biggest quarterly profit since 2022, as pricing for a 0.25% Fed interest rate cut in June drops.
A string of strong US data in recent days in addition to bullish remarks by Fed officials will likely nudge the Fed towards holding interest rates unchanged for an extended duration.
The Index
- The dollar index rose 0.1% to 104.67, with a session-low at 104.51.
- The index rose 0.25% on Thursday, the third profit in a row, scaling a six-week high at 104.73 following US growth data.
Waller's Remarks
Federal Reserve member Christopher Waller said on Wednesday that there’s no rush to cut interest rates, and that he wants to see at least two months of low inflation data before cutting rates.
He added that recent US data could delay the number of expected US interest rate cuts this year.
US Rate Prospects
- Earlier US data showed GDP growth at 3.4% in the fourth quarter of 2023, beating estimates of 3.2%.
Following the excellent data, the odds of a 0.25% Fed interest rate cut fell from 63% to 59%.
Quarterly Trades
The dollar index is up 3.25% so far this quarter on track for the third quarterly profit in the last three quarters.
The gains are underpinned by increasing bullish remarks by Fed officials following upbeat economic data.
End of Article
Euro declines to five-week trough amid thin trading
Euro Decline Amid Holiday Thin Trading
Euro declined in European trade on Friday against a basket of major rivals, sharpening losses for the fourth straight session against the dollar and plumbing five-week lows amid thin trading due to the Good Friday holiday.
Euro Heading for Quarterly Loss
Euro is heading for a quarterly loss, the second in the three quarters due to concerns about the widening policy gap between Europe and the US.
EUR/USD
- EUR/USD fell 0.2% to 1.0769, the lowest since February 20, after losing 0.4% on Thursday, the third loss in a row following positive US data.
Bearish Remarks
- Latvian Central Bank Governor Mārtiņš Kazāks said that inflation has fallen, with June now becoming a prime time to start cutting borrowing costs.
- Italian Central Bank Governor and ECB member Fabio Benita said that the ECB is heading for interest rate cuts as inflation quickly approaches the 2% target.
- ECB Chief Economist Philip Lane said the ECB is increasingly confident that European wage growth is slowing down to normal levels, opening the door for interest rate cuts.
European Rates
Such remarks boosted the odds of a June interest rate cut by the ECB, with investors now expecting 90 basis points of total interest rate cuts by the ECB this year.
Strong US Data
- Earlier US data showed GDP growth beat expectations in the fourth quarter of last year, while unemployment claims fell, as pending home sales rose in February.
US Data
Following the excellent data, the odds of a 0.25% Fed interest rate cut fell from 63% to 59%.
Quarterly Trades
The EUR/USD pair is down 2.5% so far this quarter, on tracking for the second quarterly loss in three quarters.
Interest Rate Gap
The eurozone-US interest rate gap currently stands at 100 basis points in favor of the US, however it could increase to 125 basis points in June if the ECB went ahead with cutting rates and the Fed held its ground, which would put the euro in a weak position.
Gold hits fresh record highs, marking a 6% quarterly profit
Gold Prices
Gold prices rose on Thursday to fresh record highs while the dollar eked out gains against major rivals, with the precious metal marking a quarterly profit.
US Economic Data
- Earlier US data showed GDP growth at 3.4% in the fourth quarter of 2023, beating estimates of 3.2%.
- US unemployment claims fell to 210 thousand in the week ending March 23, below estimates of 214 thousand.
- The University of Michigan’s consumer confidence index rose to 79.4 from 76.5, marking mid-2021 highs.
- US pending home sales also rose 1.75% m/m in February, while falling 7% y/y.
US Personal Spending Data
Now investors await the important US personal spending data on Friday, which is the Fed’s favorite inflation index.
Dollar Index
- The dollar index rose 0.2% as of 20:04 GMT to 104.4, with a session-high at 104.5, and a low at 104.3.
Gold Spot Prices
On trading, gold spot prices rose 1.3%, or $29.5 to $2241.70 an ounce, with a weekly profit of 2.6%, and a quarterly profit of 6%.
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