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Stronger On Back Of PPI Data & Middle East Tensions


Gold is 0.3% higher in the Asia-Pac session, after closing 1.0% higher at $2049.06 on Friday.

  • The move higher was assisted by lower-than-expected PPI data. US producer prices decreased 0.1% in December compared with expectations for a 0.1% increase. This saw the annual rate for headline and core prices at 1% and 1.8% respectively. Ex Food and Energy were lower than expected as well. The PPI report more than offset the impact of Thursday's slightly hotter CPI.
  • Short-end US Treasuries held richer into Friday’s close, indicative of higher projected rate cuts through mid-2024: March 2024 chance of a rate cut was 77% w/ cumulative of -20.9bp at 5.120%, May 2024 was fully pricing in 25bp cut now, cumulative -50.1bp at 4.828%. June 2024 has cumulative -80.4bp at 4.525%.
  • Some haven demand also provided support for US Treasuries amid increased worries over tensions in the Red Sea after the U.S. and U.K. attacked Houthi targets in Yemen.

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