Daily Digest Market Movers: Gold price draws support from expectations for lower interest rates and central bank buying
- A buying spree by China’s central bank, along with expectations that lower US interest rates are on the horizon, pushed the Gold price to a fresh record high on the first day of a new week.
- Official data released Sunday showed that bullion held by the People’s Bank of China rose by 0.2% to 72.74 million troy ounces last month, marking the 17th consecutive month of increase.
- The markets have been pricing in an even chance that the Federal Reserve (Fed) will start its rate-cutting cycle at the June policy meeting, which further benefits the non-yielding yellow metal.
- The global risk sentiment got a boost after Israel withdrew more soldiers from southern Gaza and committed to fresh talks on a potential ceasefire, easing geopolitical tensions in the Middle East.
- The US Bureau of Labor Statistics (BLS) reported on Friday that Nonfarm Payrolls (NFP) increased by 303K in March vs the 200K expected and the previous month's downwardly revised reading.
- Other details of the publication showed that the Unemployment Rate edged lower to 3.8% from 3.9% in February amid a rise in the Labor Force Participation Rate to 62.7% from 62.5% previously.
- The data forced investors to scale back their expectations for a total number of rate cuts in 2024 to two as against three rate cuts projected by the Fed, which pushes the US Treasury bond yields higher.
- The rate-sensitive two-year US government bond and the benchmark 10-year Treasury note surged to a four-month peak on Friday, underpinning the USD and capping gains for the commodity.
- Traders now look to the release of the US consumer inflation figures for March and the FOMC meeting minutes on Wednesday for cues about the Fed's rate-cut path and a fresh directional impetus.
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