Daily Digest Market Movers: Gold price attracts haven flows amid persistent geopolitical risks
- The US Dollar strengthened across the board amid a surge in the US Treasury bond yields in response to a robust inflation report and exerted downward pressure on the Gold price on Wednesday.
- The US Bureau of Labor Statistics (BLS) reported the headline Consumer Price Index (CPI) climbed 3.5% on a year-on-year basis and 0.4% compared with the previous month, surpassing expectations.
- Excluding volatile food and energy components, the core CPI accelerated to the 3.8% YoY rate, also beating estimates and stoking worries that the Federal Reserve may keep rates higher for longer.
- The minutes from the March FOMC meeting revealed that policymakers wouldn’t be cutting rates until they gained greater confidence that inflation was on a steady path back to the 2% annual target.
- The markets were quick to react and pushed back the expected timing of a first interest rate cut by the Fed to September from June and the number of 25 basis points cuts this year to under two.
- The yield on the rate-sensitive two-year US government bond and the benchmark 10-year Treasury note spiked to their highest level since November last year, pushing the USD to a fresh YTD peak.
- Ceasefire talks between Israel and Hamas have yielded no agreement, which, along with a possible Iranian retaliation over a suspected Israeli strike on its embassy in Syria, weigh on investors' sentiment.
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