Daily digest market movers: Gold tumbles amid sour sentiment on US Dollar strength
- The University of Michigan's preliminary Consumer Sentiment Index for April showed a decline to 59.7, falling below the expected 79.0. Additionally, short-term inflation expectations for the coming year increased to 3.1%, up from the anticipated and previous rate of 2.9%. Long-term inflation expectations, looking five years ahead, also rose, moving from 2.8% to 3.0%.
- Mixed inflationary data revealed in the United States (US) prompted investors to trim expectations of the Fed’s rate cuts. Data from the Chicago Board of Trade (CBOT) suggests that futures traders expect just two cuts to the fed funds rate as they project the main reference rate to end the year at around 4.915%.
- The US Dollar Index (DXY) also witnessed a substantial increase, soaring over 0.64% to reach a new YTD high of 106.10.
- Boston Fed President Susan Collins said the first rate cut could be delayed while adding that she expects to cut rates twice instead of thrice.
- Chicago Fed’s Austan Goolsbee commented that multiple inflation readings are higher than he wants, adding that the Middle East instability is a wild card for the Fed in terms of oil prices and gas; a negative supply shock is not good.
- Kansas City Fed's Jeffrey Schmid emphasized that the current stance of US monetary policy is appropriate, given the persistently sticky inflation levels. He urged for patience on interest rates, advocating for a cautious approach until it is evident that inflation is receding toward the 2% target.
- World Gold Consortium reveals that the People’s Bank of China was the largest buyer of the yellow metal in February, increasing its reserves by 12 tonnes to 2,257 tonnes.
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