Gold bounced back on Wednesday after a couple of tough days earlier in the week. People were feeling more relieved about geopolitical tensions easing. Even though there was good economic news from the US, a strong US Dollar, and higher US Treasury yields, gold buyers didn’t let that stop them. They saw the recent dip in gold prices as a chance to buy in. But by the end of Wednesday, gold still ended up with a slight loss of 0.25%.
Gold is currently trading at $2,317, which is a slight decrease of 0.05%. The tension in the Middle East appears to have calmed down after some back-and-forth actions between Iran and Israel. People were thinking that the Federal Reserve might cut interest rates in June and July, but those hopes seem to have disappeared. Now, most folks in the market are guessing that the Fed won’t lower rates until September 2024.
The US Department of Commerce reported that in March, orders for durable goods (like cars and appliances that last a long time) were higher than what experts expected. This means people were buying more big-ticket items than anticipated. However, when you look at the core sales (which exclude volatile items like transportation equipment), they didn’t meet expectations. But, they were better than the previous month, showing some improvement.
Market Movers Daily Digest: Gold Recovers as Durable Goods Orders Report Boosts Sentiment
In March, orders for long-lasting goods in the US jumped by a significant 2.6% compared to the previous month. This was much higher than the 0.7% increase seen before and even beat the expected rise of 2.5%. However, when you remove transportation items from the equation, the increase was smaller at 0.2%, still better than February’s 0.1%, but slightly below the projected 0.3%.
We’re eagerly waiting for the upcoming Q1 GDP data and core PCE inflation figures. These will give us more clues about when the Federal Reserve might decide to lower interest rates. The core PCE Price Index, which is the Fed’s preferred measure of inflation, is expected to hold steady at 0.3%. Meanwhile, the annual core PCE rate is predicted to dip to 2.6% from February’s 2.8%, indicating a potential easing of inflation pressures.
The softer-than-expected S&P Global PMI report on Tuesday increased the chances of a rate cut in July. According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, the US economy slowed down at the beginning of the second quarter, with businesses reporting below-average growth in April. This slowdown could help bring down stubbornly high inflation, which is currently well above the Fed’s target of 2%.
Traders on the Chicago Board of Trade (CBOT) are predicting that the fed funds rate will end 2024 at 4.98%, slightly up from Tuesday’s prediction of 4.965%. Additionally, the US 10-year Treasury benchmark rate has climbed by six basis points to 4.66%. The US Dollar Index (DXY) is also up by 0.18% at 105.87.
Analyzing Trends: Gold Maintains Stability Below $2,320
Gold managed to regain some lost ground recently, even though it formed a pattern on the chart that suggests a potential downturn, called a “bearish engulfing.” This pattern typically indicates a pullback in prices. Despite this, buyers seemed to be in control on Wednesday. However, they still face some challenges. To maintain their momentum, they need to push the price of gold above the low point it hit on April 19th, which was $2,373. If they can achieve this, they might have a chance to test the $2,400 mark. If successful, their next target would be the high point reached on Friday, which was $2,417, followed by the all-time high of $2,431.
On the other hand, if the price of gold drops below the lowest point it reached on April 15th, which was $2,324, it could signal a downward trend, potentially leading to a test of $2,300. If the price falls below that level, it might reach the high point from March 21st, which was $2,222.
