Price Indicator

Gold Focus :

1. ICDX gold prices rose 0.17% in the week (8/4-12/4).
2. Markets expect the Fed to likely hold interest rates until June.

Market Review

ICDX gold prices strengthened to $2,342.03 per Troy Ounce compared to the previous week as a series of hot US data dimmed the Federal Reserve's prospects for lowering interest rates.

Geopolitical tensions continue to rise in the Middle East after Iran launched more than 300 drones and missiles against military targets in Israel on Saturday evening in response to Israel's alleged attack on the Iranian consulate in Syria on April 1. Iran's Islamic Revolutionary Guard Corps (IRGC) confirmed the attack. Iran confirmed that the attack was 'aimed at a specific target'. Regarding this, Israel is likely to carry out another retaliatory attack on Iran. If tensions between these two countries resolve quickly and do not escalate, the focus will return to the prospects of the US Fed. Precious metals and safe haven currencies are expected to experience gains, while risk assets are expected to see a selloff.

The US core personal consumption price index (Core PCI) grew by 0.38%, which is a positive indication of American inflation. Fed official Tom Barkin also added a statement that the Fed was making a lot of progress in controlling inflation so there was no need to rush in making a decision (lowering interest rates). Apart from that, other American economic data, namely the number of unemployment claims, experienced a drastic decline, indicating that the US jobs market is still strong. Producer Price Index (PPI) data for March also said that in line, demand data increased by 0.2% in March.

This US economic data encouraged the performance of US treasury yields to increase by around 4.7%, making non-yielding gold less attractive and limiting the increase in prices of the yellow metal commodity. Federal Reserve Chairman Jerome Powell signaled policymakers will wait longer than previously expected to cut interest rates following a series of inflation figures that have not yet reached targets. Powell pointed to the lack of additional progress made on inflation after the rapid decline seen at the end of last year, and noted that it will likely take more time for officials to gain the necessary confidence that price growth is heading toward the Fed's goal of 2% before the cut. the lower one.

Market View

The Fed's Interest Rate Decision

Market players pushed back their expectations for the first interest rate cut by the Federal Reserve (The Fed) to September from June after data released from the US last week showed inflation was still high. Additionally, market players currently forecast less than two rate cuts in 2024 compared to the three projected by the Fed. Monday's economic data released by the US Department of Labor revealed Retail Sales in March rose 0.7% MoM, above expectations of 0.4%. This represents a 2.1% increase in the first quarter of 2024 compared to the first quarter of last year, which is an indication of consumer strength. Chairman of the American Central Bank (The Fed) Jerome Powell gave a hawkish statement regarding the issue of lowering interest rates. Powell and several Fed officials have indicated that interest rates will remain high and may not be cut anytime soon.

In other side, Increasing geopolitical tensions in the Middle East between Iran and Israel, especially after Iran launched a retaliatory attack, has contributed to raising gold prices. It is feared that this will become an ongoing conflict and is feared to escalate into a regional conflict, especially since we see that there is no indication of a ceasefire between the two parties. If this happens, the market will enter Risk Off mode where market players tend to choose to protect their assets so that demand for safe-haven assets such as gold and precious metals.

Weekly Economic Data and Event Calendar

Source: ICDX Research