Gold Near Two-month Peak as Dollar Drifts

US dollar drifted within a tight range on Monday, pressured by lower Treasury yields - Reuters
US dollar drifted within a tight range on Monday, pressured by lower Treasury yields - Reuters
TT

Gold Near Two-month Peak as Dollar Drifts

US dollar drifted within a tight range on Monday, pressured by lower Treasury yields - Reuters
US dollar drifted within a tight range on Monday, pressured by lower Treasury yields - Reuters

Gold prices lingered close to a two-month high on Monday, after softer US economic readings last week cemented prospects of an interest rate cut in June by the Federal Reserve.

Spot gold edged 0.1% lower to $2,081.34 per ounce, as of 0630 GMT, but hovered near $2088.19, a level seen on Friday when the contract hit its highest since Dec. 28. US gold futures fell 0.3% to $2,090.10.

"The key drivers for gold is what's going to happen on the interest rate front - and we saw a move higher in gold on Friday because a series of macro releases out of the US moved the narrative towards the Fed possibly decreasing rates sooner than expected," Marex analyst Edward Meir said.

Gold prices rose about $50 last week, with absolutely all of the gains coming on the last two days on the back of poor US manufacturing and construction spending data and easing price pressures, according to the Fed's preferred inflation gauge.

This came as the US dollar drifted within a tight range on Monday, pressured by lower Treasury yields, as traders waited for more crucial economic data for fresh clues on the timing of Federal Reserve interest rate cuts.

The euro was firm following Friday's 0.33% advance, with a European Central Bank policy decision looming on Thursday.

The yen fluctuated around the closely watched 150 per dollar level, as investors tried to assess whether the Bank of Japan's exit from its negative interest rate policy could happen as soon as this month.

The dollar index - which measures the currency against six major peers, including the euro and yen - was little changed at 103.85 as of 0530 GMT, oscillating narrowly in the bottom half of it 103.43-104.97 range of the past month.

The index lost 0.26% on Friday following some weak manufacturing and construction spending data.

That also weighed on Treasury yields, removing additional support for the dollar, with the benchmark 10-year yield sliding as low as 4.178% for the first time in two weeks. The yield stood around 4.2% on Monday.

"Bias appears to be swinging towards a test of range support," in the lead up to key macro releases this week, as well as Fed Chair Jerome Powell's testimony to Congress, Westpac strategists wrote in a client note.

"However, markets will need a major shift in data to suggest that range support will be anything other than another buying opportunity," that will keep the dollar index within its current range, the note said.

This week brings manufacturing and services ISM readings on Tuesday, with the main event on Friday in the form of monthly payrolls figures.



Is Black Friday Still a Holiday Shopping Juggernaut in 2024?

People wait in a queue to enter the Lego store during Black Friday shopping in New York, New York, USA, 29 November 2024. (EPA)
People wait in a queue to enter the Lego store during Black Friday shopping in New York, New York, USA, 29 November 2024. (EPA)
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Is Black Friday Still a Holiday Shopping Juggernaut in 2024?

People wait in a queue to enter the Lego store during Black Friday shopping in New York, New York, USA, 29 November 2024. (EPA)
People wait in a queue to enter the Lego store during Black Friday shopping in New York, New York, USA, 29 November 2024. (EPA)

After weeks of pushing early deals, retailers in the United States and some other countries tried to seduce customers with promises of bigger discounts on Black Friday, the sales event that still reigns as the unofficial kickoff of the holiday shopping season even if it's lost some luster.

Department stores, shopping malls and merchants — big and small — see the day after Thanksgiving as a way to energize shoppers and to get them into physical stores at a time when many do the bulk of their browsing and buying online.

Enough consumers enjoy holiday shopping in person that Black Friday remains the biggest day of the year for retail foot traffic in the US, according to retail technology company Sensormatic Solutions.

“Black Friday is still an incredibly important day for retailers,” Grant Gustafson, head of retail consulting and analytics at Sensormatic, said. “It’s important for them to be able to get shoppers into their store to show them that experience of what it’s like to browse and touch and feel items.”

At Macy’s Herald Square in Manhattan, a steady stream of shoppers early Friday found some shoes and handbags priced half-off, special occasion dresses marked down by 30%, and 60% off the store's luxury bedding brand.

Keressa Clark, 50, and her daughter Morghan, 27, who were visiting New York from Wilmington, North Carolina, arrived at 6:15 a.m. at the store that served as the setting for the 1947 Christmas movie “Miracle on 34th Street.”

“We don’t have a Macy’s where we are from. I am actually shocked to see so many Black Friday deals because so many things are online,” Morghan Clark said.

Clark, who works as a nurse practitioner, said she was feeling better about the economy because of President-elect Donald Trump’s pending return to the White House and plans to spend $2,000 this holiday season, about $500 more than a year ago.

She said she would not mind if prices are higher next year as a result of the tariffs on foreign-made goods Trump has pledged to implement. “Anything that can encourage production in the US I am all for it,“ Clark said.

In the US, analysts envision a solid holiday shopping season, though perhaps not as robust as last year’s, with many shoppers cautious with their discretionary spending despite the easing of inflation.

At many stores, the frenzied crowds of Black Fridays past never returned after the coronavirus pandemic. Early Friday morning, a Walmart in Germantown, Maryland, had only half of the parking spots filled. Some shoppers were returning items or doing their routine grocery shopping.

Bharatharaj Moruejsan, a 35-year-old software engineer, said he typically doesn't shop on Black Friday but decided to check out the deals at Walmart because he was jet-lagged after returning from a month-long family vacation to India. He scored an iPad for his 1-year-old daughter for $250 compared to the original $370 price tag.

“That’s a good deal,” Moruejsan said.

Retailers are even more under the gun to get shoppers in to buy early and in bulk since there are five fewer days between Thanksgiving and Christmas this year.

Target had an exclusive book devoted to Taylor Swift's Eras Tour and a bonus edition of her “The Tortured Poets Department: The Anthology” album that it said would only be available in stores on Black Friday. Customers can buy them online starting Saturday.

Best Buy has introduced an extended-release version of the doorbuster, the limited-time daily discounts that for years were the rage and sometimes sparked brawls. The United States’ largest consumer electronics chain has released doorbuster deals every Friday since Nov. 8 and planned to continue the weekly promotion through Dec. 20.

Impulse purchases and self-gifting were potential areas for big sales growth, said Marshal Cohen, chief retail advisor at market research firm Circana. Shoppers are three times more likely to buy on impulse at a physical store than online, according to Circana research.

Tara Rutherford, 53, headed straight to Macy's Herald Square to shop for herself after finishing her overnight nursing shift at a Manhattan hospital. A newlywed, Rutherford said she rarely shops on Black Friday because of her work schedule but was “feeling festive.”

“This is all about me," she said, eyeing boots that carried a 40% discount.

Black Friday no longer is an American-only holiday event. Retailers in Australia, Canada, France, Germany and the UK also appealed to holiday shoppers looking to save money.

In India, about 200 Amazon warehouse workers and delivery drivers, rallied Friday in New Delhi, some wearing masks of Amazon chief Jeff Bezos, to demand better wages and working conditions. Similar protests were planned in other countries.

Camilla Bjorkqvist, 48, and her friend Tessa Goosens, 48, were visiting New York from the Netherlands to spend the Thanksgiving weekend with friends and to shop at Macy’s. Even though Black Friday has become a commercial event in The Netherlands, the women said it's not the same.

“Macy’s is special. It’s iconic,“ said Goosens, who bought a Samsonite suitcase and a suit for work on sale.

The National Retail Federation predicted that shoppers would increase their spending in November and December by between 2.5% and 3.5% over the same period a year ago.

Vivek Pandya, the lead analyst at Adobe Digital Insights, said more shopper interest in bargain-hunting this year would drive what sells and when.

For example, Thanksgiving Day is the best time to shop online to get the deepest discount on sporting goods, toys, furniture and appliances, according to Adobe's analysis. But Black Friday is the best time to buy TVs online. People shopping for televisions earlier in the season found discounts that averaged 10.8%, while waiting until this Friday is expected to yield 24% discounts, Adobe Digital Insights said.

Cyber Monday, however, is expected to be the best time to buy clothing and gadgets like phones and computers online.

Across the board, Black Friday weekend discounts should peak at 30% on Cyber Monday and then go down to around 15%, according to Adobe’s research.