Gold price eyes all-time high as US economy cools

2024-03-05
Summary:

Gold is nearing a 3-month peak on Tuesday as markets anticipate the Fed's June rate cut. It surged $50 last week due to weak US data.

Gold price perched around a three-month peak on Tuesday, driven by increased bets for a June interest rate cut by the Fed. Bullion surged about $50 last week on a slew of tepid US data.

Manufacturing slumped further last month, the 16th straight session the reading remained under 50, but there were signs activity was on the cusp of rebounding as customer inventories fell for a 3rd straight month.


Markets are pricing in a 66% chance of a Fed rate cut in June, according to the CME Fed Watch Tool. Atlanta Fed President Raphael Bostic said the central bank does not feel the urgent need of rate cuts.


Inflation and the US presidential election will be the biggest drivers of global markets this year, according to traders surveyed by JPMorgan in February. A possible return of Trump might derail disinflation.


The former president has promised a 10% tariff increase on all America’s trading partners. Not only so, he lambasted illegal immigrants and Biden’s border policies at his recent campaign rally.


David Solomon, the CEO of Goldman Sachs, said that The markets are pricing in a high probability of the US economy’s soft landing. Ellen Zentner, Morgan Stanley's chief US economist, also cautioned against a hard landing.


The share of immigrants in US labour force has steadily increased for more than a decade, and that growth is poised to continue, some economists say, which helps keep a lid on inflation by easing a shortage of job applicants.

XAUUSD

Gold rallied strongly above 2,100, leaving the door open to a retest of its all-time high around $2,135. But we see an imminent pullback as very likely as the RSI has advanced well beyond the 70 mark.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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