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Weaker After Stronger US PMI Data

GOLD

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.
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