Source: Golden Ten Data
On Thursday, spot gold hit a record high of $2377.57 per ounce at the end of the US market, rising 1.9%. It has risen 15% so far this year, exceeding the 13% increase for the full year of 2023. This rise has left some bystanders even more puzzled because it lacks any obvious triggers, especially considering that the market's confidence in the Fed's interest rate cut three times this year has quickly subsided. What is even more surprising is that the US dollar index also rose sharply overnight, reaching a high of 105.53, the highest level since November 2023.
On Friday's Asian session, the price of gold continued to rise. Spot gold once broke through 2,390 and rose more than 20 US dollars to a high of 2395.55 US dollars/ounce during the day. As of press time, it had declined slightly to 2383.53 US dollars/ounce; spot silver approached 29 US dollars/ounce, breaking the three-year high to 28.946 US dollars/ounce.
The US PPI index for March, which was announced on Thursday evening, rose 2.1% from the same period last year, the highest increase in 11 months. This data, combined with the previously popular CPI index, laid the foundation for the bumpy path faced by the Federal Reserve to achieve the 2% inflation target. New York Federal Reserve Chairman Williams and Richmond Federal Reserve Chairman Barkin recently stated that recent inflation data is disappointing and has not increased confidence that the cooling of inflation is spreading.
However, the details in the PPI report have calmed investors who are worried that inflation is accelerating again, so some have increased speculation. Analysts also believe that the heightened geopolitical risks in the Middle East and Ukraine, combined with the purchase of gold by central banks led by China, are still adding some bullish momentum to gold.
According to specific data, PPI recorded 2.1% year-on-year growth in March, the highest level in 11 months, but lower than analysts' expectations of 2.2%; the month-on-month growth rate slowed to 0.2%; the March core PPI accelerated to 2.4% for three consecutive months, slightly higher than the expected growth rate, while the month-on-month growth rate slowed to 0.2% from February, which is in line with expectations; it affects several categories of the PCE price index, which favors the Fed's inflation index, which is weak. After the PPI was announced, the price of US Treasury bonds turned up and yields fell back.
Nikki Schers, Head of Metals Strategy at MKS PAMP SA, said: “PPI is enough to mitigate the popularity of CPI data the day before to a certain extent. Overall, the trend of US bonds seems to indicate that the Fed is about to raise interest rates, and the trend of gold seems to indicate that the Fed is still in a pattern of about to cut interest rates, so any future dovish remarks will accelerate the established gold bull market trend.”
David Meger (David Meger), head of metals trading at High Ridge Futures, said, “The PPI data is a bit colder than expected. This keeps the hope that interest rates may be cut before the end of the year, so gold prices have risen. Central bank purchases and geopolitical uncertainty continue to underpin the gold market. ”
Although many say it's only a matter of time before gold retracts most of its recent gains, Michael Brown (Michael Brown) of Pepperstone Group (Pepperstone) points out that, like Bitcoin, “news/headlines still haven't seen a real peak of coverage like during recent rallies.” In other words, this trend is likely to continue even longer until a sense of carnival finally sets in.
Ole Hansen (Ole Hansen), head of commodity strategy at Saxo Bank, said that the strength of gold is also supported to a certain extent by “strong demand from investors who are not sensitive to interest rate financing,” and these investors seek to hedge against financial market risks.
UBS analyst Giovanni Staunovo said, “If we want the price of gold to rise further, we still need to see a recovery in demand for gold exchange-traded funds (ETFs), and this requires the Federal Reserve to suggest interest rate cuts.”
Fxstreet analysts wrote that if the gold price decisively breaks through the $2,365 area, it will pave the way to challenge the $2,400 psychological barrier. Further increases can be seen at $2,450 and $2,500. On the other hand, if the price of gold falls below $2,359, it could challenge the April 10 low of $2,319, followed by the April 8 low of $2303. Once it falls below these positions, the next support level will be the 21-day high of $2,222 hit in March, and a further decline will be towards $2,200.
edit/lambor