10 years us yield It was down about 1% on Friday at 4.67%. However, yields rose nearly 1% to end the week higher, while the U.S. two-year Treasury yield was 4.99%, up nearly 1bps on the week but down nearly 1bps on Friday.
The U.S. dollar index rose nearly 0.5 percent to end at 106.07 on Friday, holding steady on a weekly basis.
Data summary
The S&P Global Flash April Composite Index (April), which measures production in manufacturing and services, came in at 50.90, compared to the expected 52. This was the lowest reading since August. The employment index decreased by 3.20 points to 48, the lowest level in about four years, due to shrinking labor costs in the service industry and slowing growth in the manufacturing industry. The S&P Global Manufacturing PMI unexpectedly contracted to 52, against expectations. New home sales data (March) was 693,000, exceeding expectations of 668,000. However, February data has been revised downward.
U.S. durable goods order statistics (March) were mixed, although the March statistics exceeded expectations, as preliminary statistics were revised downward. U.S. GDP in the first quarter of 2024 was 1.6% quarter over quarter, lower than the 2.5% expected and significantly lower than the 3.4% in the fourth quarter of 2023. However, the core Personal Consumption Expenditure Price Index (PCE) rose 3.7%, beating expectations of 3.4% and significantly up from 2% in previous data. The weekly employment report was slightly better than expected.
US statistics released on Friday showed that personal income (March) was 0.50%, in line with expectations, but personal spending was 0.80%, above expectations of 0.60%. PCE deflator CPI (March) was 0.30% compared to the previous month (expected 0.30) and 2.70% compared to the previous year, compared to the forecast of 2.70%.The standalone CPI of the PCE core deflator was 0.30%, which was in line with the forecast, but 2.80% compared to the previous year. exceeded the expected 2.70. %. The higher-than-expected numbers showed once again that U.S. inflation is persistent.
gold demand
Total known global gold ETF holdings decreased for the third consecutive year on April 25, with total holdings of 81.157 MOz. According to the China Gold Association, China's gold consumption increased by 5.94% year-on-year to about 308.90 tons in the first quarter due to a significant increase in demand for gold bars and gold coins.
Domestic gold prices in India continue to trade at a discount to international prices due to sluggish demand, especially due to soaring jewelery prices.
Next week's main events
The most important event next week will be the US Federal Reserve's FOMC meeting, the results of which will be known on May 1st. Other events include US ADP employment changes (April), JOLT job openings (March), ISM manufacturing industry (April), unit labor costs (1st quarter provisional figures), factory orders (March), ISM Services (April), non-agricultural employment (April). Outside Europe, the focus will be on the UK's services PMI (last April) and manufacturing PMI. Eurozone CPI (April), Unemployment Rate (April), Manufacturing and Services PMI. German CPI (April) and GDP for the first quarter. China is scheduled to release PMIs for manufacturing and services at the end of this month.
Probability of Fed stance
Markets are now expecting one or two rate cuts starting in November, which is in sharp contrast to the six or seven weeks just a few weeks ago. Lower odds of multiple interest rate cuts could weigh on the market.
geopolitics
The geopolitical situation remains tense as traders watch for signs of an escalation in the Iran-Israel conflict, but the situation is largely under control, which is negative for the yellow metal. Israel's decision regarding Rafah continues to be closely watched.
weekly outlook
Gold is expected to fall further next week as the US Federal Reserve is likely to announce a hawkish pause at its May 1st FOMC meeting.
US Treasury yields have stabilized somewhat on the belief that US inflation statistics were not as hot as feared. But Treasuries have become vulnerable as markets reconsider the possibility of rate cuts this year. The yield on the US 10-year bond could rise to 5%. His ISM manufacturing and service data for the United States is also important. Unexpected weakness in US PMIs could support gold.
Support lies at 2290/$2265/$2250 and resistance lies at $2350/$2365/$2400.
(The author is Vice President, Basic Currencies and Products, Sharekan, BNP Paribas)
(Disclaimer: Recommendations, suggestions, views and opinions by experts are their own. They do not represent the views of Economic Times)