Daily digest market movers: Gold price awaits US NFP for fresh guidance
- Gold price takes a breather as investors turn cautious ahead of the United States NFP report for March, which will be published at 12:30 GMT. It is anticipated that the United States employers recruited 200K jobs, lower than the robust hiring of 275K seen in February. The Unemployment Rate is anticipated to remain unchanged at 3.9%.
- Investors will also focus on March's Average Hourly Earnings data to gain more insights about the inflation outlook. Economists expect monthly wage growth to have grown at a higher pace of 0.3% from 0.1% in February. Annual wage growth is forecasted to have grown by 4.1%, decelerating from the prior reading of 4.3%.
- Higher wage growth could slow the progress in inflation declining towards 2%, which could negatively influence market expectations for the Federal Reserve (Fed) to begin reducing interest rates in June. If this happens, the opportunity cost of holding an investment in non-yielding assets such as Gold will increase, weighing on its price. On the contrary, slowing wage growth will strengthen Gold’s appeal.
- Meanwhile, the stabilization in the US Dollar’s valuation after the Fed’s hawkish guidance on interest rates has also put slight pressure on the Gold price. The US Dollar Index (DXY) finds support from a two-week low of 103.90 after Minneapolis Fed Bank President Neel Kashkari said rate cuts won’t be required this year if inflation stalls.
- Kashkari said he forecasted two rate cuts by 2024 in the latest Fed dot plot. “The Fed needs to keep interest rates higher in the range of 5.25%-5.50% if inflation remains stronger than hoped,” Kashkari warned. He added that if that still did not work, further rate increases are not off the table, but they are also not a likely scenario given what we know right now," Reuters reports.
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