Gold cost is trading at close $2,040 the most elevated level since the last year high in March 2022, continuing yesterday’s Bull Run in the midst of weakness in the US Dollar. The weakness in dollar came forward when the JOLTS job opening data came for the first time in over eleven months below Ten million new job openings, this provided the market participants the assurity that the labour market which was previously tight is now showing signs of weakness, furthermore the factory orders placed with manufacturers also decreased to -0.7% which suggested that the US economy is gradually slipping into recession. The US real yields sliding lower with the 10-year gauge dipping under 1.10%, a long way from the 1.72% seen just last month. These two data created sentiments amongst investors that the economy is gradually slipping into recession and with the job market cooling Fed won’t have much room to increase its interest rates. The two contributed to the safe haven flows in gold.
With all things said, the weakness in the dollar index has also been due to the recent confrontation of the US dollar reserve currency status, which further strengthen the gold prices. Chinese Yuan has surpassed US dollar as the most traded currency for the first time in Russia in month of February and Brazil and China have halted the Dollar usage as an intermediary in trades.
On the contrary, FED Cleveland president Loretta retreated hawkish statements that the FED needs to increase rates above 5% and hold there for a while. Whereas The poor run of US economic data has led markets to price in a 42% probability of 25 basis points (bps) Fed rate hike in May vs. about 58% seen before the data release.
Focus is now on the ADP Non-Farm Payroll and ISM services PMI which is scheduled today at 1715 HRS PKT & 1900 HRS PKT respectively, the forecast is a decline to 208K in March from February 242k. An adverse data could weigh on the USD and a substantial decrease in the Prices Paid sub-index of ISM Services PMI could also hurt the USD and vice versa.
Ahead on Friday, April 7 the US Bureau of Labor Statistics will publish the labor market data for March at 1730 HRS PKT, which is expected to show a decline of 75000 in Nonfarm Payrolls (NFP).