Global gold prices are retreating during these moments of trading today, Monday, as traders await more US economic data this week, after recent data showed that inflation has stabilized and raised hopes that the Federal Reserve will cut interest rates later this year.
The short-term driver for gold will be the US jobs data, and if it shows some slowdown in the labor market, it will be good for gold prices.
In the meantime, investors are watching for the release of the US Purchasing Managers’ Index (PMI) reading today at 14:00 GMT, the ADP employment report on Wednesday and the nonfarm payroll data due out on Friday to gauge the state of the US economy and whether it will prevent the Fed from cutting interest rates at its September meeting or not.
Friday’s data showed that US inflation stabilized in April, raising bets on a rate cut in September. The US core personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose 0.2% from the previous month in April, after rising 0.3% in March, the slowest pace of increase since the beginning of the year and below market expectations of a 0.3% rise.
But the data showed that the core PCE price inflation gauge was stable at 2.8% on an annual basis in April, unchanged from the previous month, the lowest since March 2021, but still well above the Fed’s 2% target. Traders are currently pricing in a roughly 54% chance of a cut in September, versus around 49% before the report was released.
While bullion is seen as a hedge against inflation, rising interest rates increase the opportunity cost of holding non-yielding assets.
Gold and the Dollar Now
– Gold futures are now down 0.4% to $2336 an ounce.
– Spot gold is down about 0.46% to $2316 an ounce.
– On the other hand, the dollar index is flat at 104.600 points.
Other Metals
– Spot silver fell 0.8% to $30.12 an ounce, platinum rose 0.3% to $1040.80, and palladium fell 0.5% to $908.19.
Violent Collapse of Aramco Stock, Several Reasons Align and the Stock at Its Lowest Price
Saudi Aramco shares (TADAWUL:2222) 2222 are under severe downward pressure, with the stock so far down 2.59% to 28.3 riyals per share and to its lowest level since its IPO.
Aramco stock takes a hit despite TASI’s rise OPEC?
This decline comes despite the turnaround of the main Saudi stock index “TASI” to rise after a series of daily losses today, with the index now up 0.8% to 11,598 points. Oil prices closed down last week, with Brent prices falling to $81.37 a barrel and West Texas Intermediate crude at $77.18. However, Aramco shares traded at higher levels in line with a bigger decline in oil prices.
It is worth noting that an OPEC+ meeting will take place in Riyadh today, and the alliance is expected to seek a complex agreement to extend oil production cuts until 2025.
Violent Decline After Important Announcement
The sharp decline in Aramco’s share prices comes after the company announced its intention to float more than a billion in the Saudi market. According to a statement published on the website of the Saudi Stock Exchange (Tadawul), “the secondary public offering of Aramco shares includes the offering of 1.545 billion shares of the company’s shares by the government, equivalent to about 0.64% of the company’s issued shares.”
This is the second offering after the initial public offering in 2019, which included about 1.5% of the company’s shares. Aramco is the fifth largest company in the world by market capitalization. Aramco shares closed yesterday down 0.17% to 29.1 riyals ($7.76), equivalent to a market capitalization of $1.87 trillion. According to the statement, 154.5 million shares, or 10% of the shares offered, will be allocated to the individual subscriber category this time, excluding shares issued under the greenshoe option, if there is sufficient demand from individual subscribers
Euro Holds Gains After Hot Inflation Data in Europe
Single Currency Poised to Break Through Price Range Below $1.09 Barrier
The euro rose in the European market on Monday against a basket of global currencies, maintaining its gains for the third consecutive day against the US dollar, after higher-than-expected inflation data in Europe in May, which renewed inflationary pressures on the European Central Bank and reduced the chances of further cuts in European interest rates this year.
The euro ended Friday’s trading up 0.15% against the dollar, in its second consecutive daily gain, driven by European inflation data. The single European currency “euro” gained 1.7% against the US dollar over the past May, in its first monthly gain in 2024, specifically since December 2023. This monthly gain was supported by reduced chances of further cuts in European interest rates after the expected cut this week during the European Central Bank meeting.
Inflation in Europe exceeds expectations in May
The core consumer price index rose by 2.9% in May, above market expectations of 2.7%, and the index rose by 2.7% in April.
European interest rate The above data reduced the chances of further cuts in European interest rates this year. Markets have reduced the pricing of cuts from 75 basis points to 50 basis points this year from the European Central Bank.
European Central Bank The European Central Bank’s monetary policy meeting will kick off next Wednesday, and decisions will be issued on Thursday, where it is widely expected that European interest rates will be cut by 25 basis points, in the first cut in European interest rates since 2014.
The European Central Bank, led by Christine Lagarde, is likely to provide new guidance and clues about further possible cuts in European interest rates, in light of recent economic developments in the eurozone, especially the acceleration of inflation again in Europe last month
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.
