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Rebounds After Yesterday’s US CPI-Induced Dip

GOLD

Gold is 0.4% higher in the Asia-Pac session, after closing 0.8% lower at $2334.04 on Thursday. Yesterday's move came after stronger-than-expected US CPI data, fuelled a further scaling back of the US Federal Reserve rate cuts, and prompted a large sell-off in US tsys. Iranian missile threat headlines had a fleeting positive impact.

  • CPI inflation: m/m (0.4% vs. 0.3% est), y/y (3.5% vs. 3.4% est); CPI Ex Food and Energy m/m (0.4% vs. 0.3% est), y/y (3.8% vs. 3.7% est).
  • US Treasuries bear-flattened, with the 2-year yield finishing 23bps higher at 4.97%. The US 10-year yield increased 18bps to 4.54%, a fresh YTD high, and more than 70bps above January levels.
  • The March FOMC Minutes reflected concerns that inflation’s progress toward its 2 per cent target might have stalled, and restrictive monetary policy may need to be maintained for longer than anticipated.
  • The market now has around 40bps of Fed easing priced for this year, well below the 75bps median projection by policymakers at the March FOMC. The first 25bp rate cut has been pushed back to November, from July ahead of the inflation data.
  • According to MNI’s technicals team, the trend condition in gold remains bullish and the next objective is $2376.5, a Fibonacci projection. Initial firm support is at $2234.8, the 20-day EMA.
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Gold is 0.4% higher in the Asia-Pac session, after closing 0.8% lower at $2334.04 on Thursday. Yesterday's move came after stronger-than-expected US CPI data, fuelled a further scaling back of the US Federal Reserve rate cuts, and prompted a large sell-off in US tsys. Iranian missile threat headlines had a fleeting positive impact.

  • CPI inflation: m/m (0.4% vs. 0.3% est), y/y (3.5% vs. 3.4% est); CPI Ex Food and Energy m/m (0.4% vs. 0.3% est), y/y (3.8% vs. 3.7% est).
  • US Treasuries bear-flattened, with the 2-year yield finishing 23bps higher at 4.97%. The US 10-year yield increased 18bps to 4.54%, a fresh YTD high, and more than 70bps above January levels.
  • The March FOMC Minutes reflected concerns that inflation’s progress toward its 2 per cent target might have stalled, and restrictive monetary policy may need to be maintained for longer than anticipated.
  • The market now has around 40bps of Fed easing priced for this year, well below the 75bps median projection by policymakers at the March FOMC. The first 25bp rate cut has been pushed back to November, from July ahead of the inflation data.
  • According to MNI’s technicals team, the trend condition in gold remains bullish and the next objective is $2376.5, a Fibonacci projection. Initial firm support is at $2234.8, the 20-day EMA.