Weaker After Stronger US PMI Data

Gold is slightly stronger in the Asia-Pac session, after closing 0.8% lower at $2013.89 on Wednesday.

• Bullion traded poorly through the US cash equity open before extending declines on the solid US PMI data and a stabilisation of the greenback in FX markets.
• Stronger than expected US data cast doubt on prospects for an interest-rate cut by the Federal Reserve in March. The market is currently assigning around a 40% chance to a 25bp rate cut in March. This compares to the near 70% chance seen a week or so ago. Lower interest rates are typically positive for non-interest-bearing gold.
• Fed speakers are in blackout ahead of next week’s FOMC meeting.
• Investors now turn to Thursday’s heavy US calendar: GDP, PCE, Weekly Jobless Claims and Tsy Sec Yellen’s Outlook.
• Wednesday’s move takes a large step closer to support at $2001.9 (Jan 17 low), according to MNI's technicals team.