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Marketupdate | 19/06/2023

Jun 19, 2023 | Marketupdates | 0 comments

Gold shrugs off soft CPI data and a Fed pause to end marginally lower on the week

Indications only | Closing prices are bids | Prices & Charts  : Trading View | Market Research Refinitiv | See disclaimer below

Summary

Gold dipped to $1955 in early Asian trading on Monday, but this was followed by a rally in Europe to $1967. This surge was on expectations that the Fed was set to pause its program of rate hikes. However, the yellow metal then performed an about-turn, declining to $1950 following a weak consumer inflation expectations report. Gold recovered to end with a marginal 0.15% loss at $1958.

In the other metals, silver ended down 0.91% at $24.07. Platinum fell 1.68% to $994, closing below the pivotal $1000 level for the first time since the beginning of April. Bucking the bearish trend, palladium ended up 2.13% at $1342 on short covering after last week’s decline to a 4-year low.

On Tuesday, gold traded between $1956 and $1966 in Asia and Europe amid good volume, as traders positioned themselves ahead of the latest US consumer price data. This data came in softer than expected with an annual reading of 4%, the lowest since March 2021. Gold reacted by trading between ahigh for the week of $1971 and $1951 in a ‘manic minute’ of trading before falling to $1941. This was due to a stubbornly high core inflation rate of 5.3%dominating sentiment, highlighting the skittish nature of the gold market. Gold ended down 0.72% at $1944, silver fell 1.66% at $23.67, and platinum declined 1.41% to end on the lows at $980. However, palladium posted a 0.6% gain.

On Wednesday, gold staged a solid rally from $1941 to $1952 in Asia and Europe before dipping back to $1945 in early New York trading. This was ahead of the release of the latest US producer price index. This data came in below expectations, sparking a rally to $1960, but then eased to $1954 ahead of the conclusion of the latest FOMC meeting and the Fed’s decision on interest rates. As expected, the US Central Bank paused its rate hike program, but there was a surprise in Chairman Powell’s press conference. He warned that rates may have to be increased to 5.6% before year-end if inflation did not slow. The yellow metal ended with a marginal 0.1% loss at $1942, silver shrugged off the Fed’s post rate decision comments to end with a 1.1% gain to $23.93, platinum ended unchanged at $980, while palladium rallied 2.3% to $1381.

Gold suffered a steep decline in Asia and Europe on Thursday to extend its post US inflation data and FOMC meeting sell-off. It reached a fresh3-month low of $1926 in early New York trading but found willing buyers into this weakness (Central Banks again?) despite stronger than expected US retail sales data. This was followed by a sustained 1.77% recovery to $1960 on heavy trading volume as the USD fell, US Treasury yields eased, and global equities rallied. The yellow metal ended up 0.82% at $1958, silver recovered from a decline to $23.25 to close with a pared 0.17% loss at $23.89, platinum gained 1.22% to $992, and palladium rose 0.72% to $1391.

Gold dipped from $1962 to $1955 in Asia on Friday morning but then staged an encouraging rally to $1967 in Europe as the USD weakened. However, a strong consumer sentiment report reignited noise about the Fed resuming their rate hike program in July. This saw gold fall to $1954 in New York before recovering into the close to end unchanged on the day and a marginal 0.15% loss for the week at $1958. Silver closed up 1.26% at $24.19 on Friday but was down 0.41% for the week; platinum eased 0.6% to $986, representing a weekly loss of 2.47%; palladium gained 1.29% to $1409 and was up 7.23% on the week.

Looking ahead, the key focus will be Fed Chairman Powell’s testimony to Congress on Wednesday and Thursday as global markets look for signals on the Fed’s monetary policy. However, unless something new emerges, we expect a week of sideways trading within technical parameters set by the 50-day Moving Average at $1985 and the 100-day Moving average at $1942. Silver looks set for a summer rally towards $26, however, the outlook for the PGM’s is mixed.

Gold Chart

Silver Chart

Platinum Chart

Palladium Chart

This document is issued by Value Trading BV. While all reasonable care has been taken in preparing this document; no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. Opinions, projections and estimates are subject to change without notice. This document is for information purposes only and for private circulation. It does not constitute any offer, recommendation or solicitation to any person to enter into transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration.