Gold rebounds following better inflation data
Daniel Hynes
Senior Commodity Strategist | helping investors and companies navigate macro, political, economic & environmental issues
Highlights
Commodity markets struggled to hold onto recent gains as traders took stock of the economic and geopolitical backdrop. Rising inventories also weighed on sentiment.
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Market Commentary
Gold rebounded after the latest US inflation data eased concerns prices were on the rise again. The March Producer Price Index came in lower than expected at 2.1% y/y. More comforting was that the PPI’s personal consumption expenditures subindex came in softer. This helped ease concerns that rate cuts by the Fed were off the table. Appetite for the precious metal remains strong, particularly from central banks, which continue to rotate out of US Treasuries and into hold. Geopolitical risks are supporting safe haven buying.
Base metals were up strongly in Asia trading, as sentiment remains supported by ongoing supply side issues. However, those gains were reversed later in the session as the USD strengthened, reducing investor appetite. Falling bets on an imminent Fed rate cut also weighed on sentiment. Nevertheless, ongoing supply tightness is likely to support the sector. Reports of cuts by Chinese copper smelters continue to surface. Zinc bucked the trend and ended higher as the market focused on looming supply cuts. Zinc smelter processing fees have fallen sharply on tightness in the concentrate market.
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Crude oil inched lower as traders took stock of the geopolitical and economic backdrop. The rise in US inventories last week raised some concern about demand in the short term. Adding to the headwinds was the stronger than expected CPI, which may see the Fed delay rate cuts. However, the geopolitical risks remain elevated. The US and its allies believe Iran, or one of its proxies, is preparing to launch a major missile or drone strike in the coming days on Israel. Crude oil prices have gained almost 19% this year amid improving fundamentals. The OPEC+ alliance continues to restrain supply, while the economic backdrop has improved in recent weeks. This bodes well for oil prices in coming months. In today’s 5in5 podcast, Bernard Hickey discusses these issues in more detail with Daniel Hynes .
Global gas prices rallied amid heightened supply risks and signs of improving demand. European gas benchmark futures rallied after Russia attacked two Ukrainian underground storage facilities on Thursday, according to the national energy company Naftogaz. This follows Ukrainian drone attacks on Russian energy infrastructure. The latest attack could impact European consumers’ desire to store natural gas in the country. Rising demand for LNG in Asia helped lift North Asian LNG prices. The benchmark has gained almost 18% over the past two months as consumers look to secure shipments ahead of European inventory restocking over the summer. Improvement in the industrial sector in China has also seen demand rebound after a shaky start to the year
Chart of the Day
Investor continue to build long positions in gold
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11 个月Thanks for posting.