GoldPrice

Gold is climbing following the news that US consumer sentiment dropped for the first time in three months in April, with the long-term economic outlook reaching the lowest point in over a year.

St. Louis Federal Reserve President James Bullard spoke on Thursday at a community development event in Tulepo, Mississippi, stating that two important signals are emerging which require careful attention.

Gold has come under selling pressure today with the joint release of the PPI index showing tame inflation pressure as well as another Labor Department report pointing to a very robust US labor market. Initial jobless claims fell to 196,000 vs 210,000 expected.

US producer prices saw the biggest gain in five months in March, with the Labor Department reporting a 0.6% gain, mostly driven by rising gasoline prices. Despite the PPI index increase, inflation pressure remains muted. Year-over-year, the less volatile core-PPI came in at 2%, the slowest rate since late 2017.

The meeting in March kept rates steady and indicated that 2019 was a year for patience. Trump and the financial markets took this as the Fed was ready to start cutting rates again. Since then the Fed has made no indications of rate cuts for 2019, suggesting that rates will be held steady for the rest of 2019.

The US Consumer Price Index hit the highest level in over a year in March, but inflation pressure remains tame due to the ongoing global economic slowdown.

FOMC Vice Chairman Richard Clarida stated that the rate of unemployment in the US could fall further yet without leading to excessive inflation. Clarida made statements at a Minneapolis bank conference on Tuesday evening which fall in line with the Federal Reserve’s current stance of pausing interest rates.

The notion of a global slowdown is gaining traction today after the IMF downgraded its economic outlook. The cut to its forecast puts growth at the lowest levels since the financial crisis. The news was likely a major factor in market action today, with the broad market S&P 500 moving sharply lower and perceived safe havens like gold moving higher. Interest rates also ticked lower as investors shed risk.

The FOMC’s March meeting had quite an impact on financial markets—particularly on the US Dollar and it’s directly correlated assets, like gold— and so the release of that meeting’s discussion minutes due on Wednesday will draw some added scrutiny from analysts and investors alike. 

The palladium market has been a hot subject in the financial media in recent months as the market overtook gold to become the most expensive of the precious metals complex. Things have taken a sour turn in recent action, however, as the metal has declined about 15% from recent highs.

The economic calendar for metals traders is a light one this week, with the majority of focus drawn towards the middle as Wednesday brings us both an updated read on US inflation as well as the minutes from March’s market-moving FOMC meeting.

Happy Friday, traders. At the time of writing, the gold market is heading towards a net-unchanged week in terms of pricing, despite some serious selling pressure at different points in the last few days that made real attempts at the lows of early March.