Gold price witnessed a strong rebound in the late New York session from around $1,961.00 following a minor correction in the US dollar Index (DXY). Investors preferred the gold price for parking their funds amid a long weekend due to the Easter holiday.
Gold Price Aims $2,000 Amid a Solid Rebound Near $1,960
It says that the Tough gets going but the journey of recapturing the crucial figure of gold price $2,000 will be filled with difficulties. The US Treasury yields have recovered from their losses recorded in the last two trading sessions on the optimism of an aggressive tight policy by the Federal Reserve (Fed) in May.
The 10-year US Treasury yields have reclaimed their three-year high at 2.83% after the Bank of Canada (BOC) and Reserve Bank of New Zealand (RBNZ) hiked their critical policy rates by 50 basis points (bps). Elevation in policy rates by worldwide central banks raised hopes of mean reversion to neutral rates sooner rather than later.
It is worth saying that the campaigning for higher interest rates will also be followed by the Fed in its May monetary policy, and in anticipation of that yields may remain underpinned while the gold prices will face headwinds. Gold price has been pressured at the end of the week and the bears are moving in at a critical area of resistance.
The gold price has rallied for six days in a row but the bulls could be throwing in the towel at this juncture. At the time of writing, the gold price is trading at $1,972.470 and has been in a range of between $1,960.60 and $1,980.43 overnight. In Asia, it is sticking to a gold price range of between $1,97.46 and $1,973.50 so far. The US dollar has been stronger, printing fresh cycle highs in the DXY in the aftermath of the European Central Bank.
Additionally, New York Fed President John Williams said on Thursday that the US Federal Reserve should reasonably consider raising interest rates by a half percentage point at its next meeting in May. This was taken as a hawkish hint for the money markets given that the more dovish the policymakers are starting to fall into line with the hawks.
At today’s meeting, the ECB reconfirmed a decision taken five weeks ago, in a broadly unchanged decision statement. ”That means that APP purchases will be conducted at a pace of EUR40bn/EUR30bn/EUR20bn in April/May/June, respectively, and net purchases to end in Q3, without a pre-specified purchase level for Q3,” analysts at Danske Bank said.
”Christine Lagarde conveyed a message of not being in a rush to tighten policies as the economic activity (which is set to become weaker amid high uncertainty) outweighs the concerns about the outlook for extended high inflation, even though Lagarde seemed concerned about medium-term inflation expectations in particular surveys,” the analysts at Danske Bank went on to explain. ”Therefore, we are slightly surprised about the messages sent during the press conference in light of its primary mandate.”
Consequently, the euro plunged to a two-year low against the greenback following the comments. The dollar index (DXY) rose to a fresh cycle high of 100.761 with the euro falling to a low of 1.0757. The US benchmark 10-year yield has scored highs of 2.833%, currently 4.55% higher on the day following two days of declines. The flows have dented the precious metal.
Meanwhile, Russo-Ukraine headlines dominate news flows, as Finland and Sweden’s eye joining NATO. The Russian Deputy Chairman of the Security Council, Medvedev, said that if both countries join NATO, it would not make any difference for Russia and emphasized that there could be no more talk of a nuclear-free Baltic, as the “balance must be restored.” Additionally, Russian President Putin has again threatened NATO with his nuclear arsenal, saying he will deploy those weapons in and around the Baltic.
Meanwhile, a raft of US economic data crossed wires. Retail sales in the US rose 0.5% m/m in March, after a revised 0.8% in February, though helped by elevated gasoline prices. Also, retail sales stripping autos and gasoline increased 0.2% last month, higher than the 0.1% fall in February. At the same time, the Department of Labour unveiled the Initial Jobless Claims for the week ending on April 9, which jumped to 185K, more than the 171K estimated, data showed on Thursday.
Later in the US session, the University of Michigan Consumer Sentiment surprised market players, jumping to a three-month high, despite high inflationary pressures. The index rose to 65.7 from 59.4 in March and beat the 59 estimations. Consumers expect that inflation will increase to 5.4% over the next year, and their forecasts for the next five to 10 years will diminish to 3%.
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