Gold Prices Stall in Tight Range, Eye Key US Economic Data

Gold prices edged higher on Wednesday but remained stuck in a narrow range as investors looked ahead to US economic data for more clarity on the Federal Reserve’s interest rate path. Investors’ focus this week will be on US GDP data due out on Thursday and the PCE report due out on Friday.

Gold and the Dollar Now

Gold futures are now down 0.22% to $2336 an ounce. Spot gold is flat at $2323 an ounce. On the other hand, the dollar index is up 0.13% to 105.640 points.

Other Metals

Among other precious metals, silver rose 0.1% in spot trading to $27.32 an ounce.

“We expect silver to outperform gold as investment flows increase,” ANZ said in a note. “Slowing mine production growth and strong industrial demand suggest that supply is lagging demand, which will keep the market in structural deficit.”

Platinum rose 0.5% in spot trading to $912.10 and palladium gained 0.4% to $1023.61.

Oil Rises After Unexpected Drop in US Crude Inventories

Oil prices rose in early trading on Wednesday, extending gains from the previous session after industry data showed a surprise drop in US crude inventories last week, signaling rising demand and shifting focus away from the fighting in the Middle East.

Market sources, citing American Petroleum Institute (API) figures, said US crude inventories fell by 3.237 million barrels in the week ended April 19. In contrast, six analysts polled by Reuters had forecast a rise of 800,000 barrels.

Traders are awaiting official US oil and product inventory data due out at 10:30 AM ET (1430 GMT) to confirm the large inventory draw. Meanwhile, expectations are growing that the UK and the EU will cut interest rates in June, which could help support economic growth and thus boost demand for oil.

Traders largely shrugged off the latest developments in the Middle East in early trading on Wednesday, as residents said Israel had intensified its strikes across Gaza, in some of the heaviest shelling in weeks.

Aussie Dollar Surges to Two-Week High on Hot Inflation Data

The Australian dollar rose broadly across the Asian market on Wednesday against a basket of global currencies, extending its gains for the third straight day against its US counterpart and hitting a two-week high, driven by hot inflation data in Australia.

The data renewed inflationary pressures on Reserve Bank of Australia (RBA) policymakers, reinforced the assumption of “higher for longer” interest rates, and all but ended bets on Australian rate cuts this year.

Inflation in Australia

Data from the Australian Bureau of Statistics (ABS) early Wednesday showed that the annual consumer price index (CPI) rose 3.5% in March, above market expectations of 3.4%, and the index rose 3.4% in February.

Inflation in Australia above expectations in March

On a quarterly basis, the CPI rose 1.0% in the first quarter of this year, exceeding market expectations of 0.8%, and the index rose 0.6% in the last quarter of last year. Service cost pressures remained stubbornly high in Australia, a disappointing outcome for RBA policymakers, and prompted markets to abandon hopes of any rate cuts this year.

Australian Rates

Markets are now pricing out almost all bets on Australian rate cuts this year. The total expected RBA easing for this year has been trimmed to 3 basis points, down from 17 basis points previously. Westpac today Wednesday pushed back the timing of its first expected RBA rate cut from September to November next year, citing slow progress in fighting inflation and a still-healthy labor market.

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Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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