Gold Rally Hits Pause ahead of US Inflation Data

Gold prices steadied near a three-month peak. Reuters
Gold prices steadied near a three-month peak. Reuters
TT
20

Gold Rally Hits Pause ahead of US Inflation Data

Gold prices steadied near a three-month peak. Reuters
Gold prices steadied near a three-month peak. Reuters

Gold prices took a breather from a record-breaking rally on Monday, which was fueled by a cooling US labor market and remarks from the Federal Reserve, with traders awaiting a US inflation report for fresh clues on the timing of rate cuts.
Spot gold was flat at $2,177.24 per ounce, as of 0602 GMT. US gold futures edged 0.1% lower to $2,183.90.
Gold set a record peak of $2,194.99 for the fourth straight day on Friday after data signaled a cooling US labor market.
"With large speculators having increased net-long exposure at their fastest weekly pace in 3.5 years last Tuesday, gold is clearly in demand and not a market to short for any length of time whilst traders expect Fed cuts," City Index senior analyst Matt Simpson said.
COMEX gold speculators raised their net long positions by 63,018 contracts to 131,060 in the week ended March 5, data showed on Friday.
Prices will simply consolidate at lofty levels heading into consumer price inflation (CPI) data for February, due on Tuesday, as that is likely the single biggest driver of gold prices this week, given that the Fed are now in a blackout period, Simpson said.
A cooler reading on the CPI print could help the case for an early rate cut, supporting gold prices. Fed Chair Powell sounded more confident about cutting rates in the coming months in his Congressional testimony last week.
Traders are currently pricing in three to four quarter-point (25 bps) US rate cuts, with a 75% chance for the first in June, as per LSEG's interest rate probability app.
Lower rates boost the appeal of non-yielding bullion.
Spot platinum edged 0.1% higher to $913.16 per ounce, while palladium was steady at $1,019.54, and silver was little moved at $24.30.



IMF's Georgieva Says US Tariffs Represent Significant Risk to Global Outlook

International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. REUTERS/Yuri Gripas/File Photo 
International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. REUTERS/Yuri Gripas/File Photo 
TT
20

IMF's Georgieva Says US Tariffs Represent Significant Risk to Global Outlook

International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. REUTERS/Yuri Gripas/File Photo 
International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. REUTERS/Yuri Gripas/File Photo 

Sweeping tariffs announced on Wednesday by US President Donald Trump pose a significant risk to the global economy at a time when growth has been sluggish, the head of the International Monetary Fund said in a statement on Thursday.

IMF Managing Director Kristalina Georgieva said it was important to avoid steps that could further harm the global economy and appealed to the United States and its trading partners to work constructively to reduce tensions, according to Reuters.

“We are still assessing the macroeconomic implications of the announced tariff measures, but they clearly represent a significant risk to the global outlook at a time of sluggish growth,” Georgieva said in her strongest comments to date on the risks posed by the US trade actions.

“It is important to avoid steps that could further harm the world economy. We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty.”

Georgieva said the IMF would provide its assessment of the announced tariffs when it releases an update to its World Economic Outlook during the April 21-26 meetings in Washington, DC, that bring together members and shareholders of the IMF and the World Bank.

The head of the global lender on Monday told Reuters that Trump's push for wide-ranging tariffs was creating great uncertainty and denting confidence, but it was not likely to trigger a near-term recession.

At the time, Georgieva said the IMF would likely lower the economic outlook slightly, adding “we don't see recession on the horizon.”

The US tariffs announced on Wednesday went far beyond the levels that had been predicted or expected by trade experts.