Sets A New All-Time High Before Gains Pared

Gold is 0.6% higher at $2085 in the Asia-Pac session, after closing 1.8% higher at $2072 on Friday. Notably, the precious metal witnessed an impressive 3% surge earlier in today’s session, reaching a new all-time high at $2135, though subsequently retracting from those peak levels.

• The push to above $2100 surpasses the previous high set during the pandemic.
• Fed Funds implied rates show a cumulative 19bps of cuts priced for the March FOMC (from 12bps before ISM Mfg), 37bp for May, and three 25bp cuts by July. Cumulative cuts build to 134bp for end-2024.
• Federal Reserve Chair Powell's attempt on Friday to temper investors' burgeoning expectations of interest-rate cuts in the first half of 2024 was met with limited impact. Investors chose to focus instead on his acknowledgment that monetary policy is "well into restrictive territory." This pronouncement triggered a noteworthy downturn in the dollar and Treasury yields, thereby bolstering the appeal of non-interest-bearing assets such as gold.
• The moderation in bullion's gains earlier today coincided with a retracement of Friday's rally in US Treasuries. Cash US Treasuries are now trading 3-7 bps lower, revealing a discernible flattening bias in the market.