Metals under pressure from a strengthening dollar. Gold drops more than 4% from all-time highs
Gold futures are losing 1.5% today as bond yields rise and the dollar index (USDIDX) rebounds, following strong preliminary US PMI data for May. The market now expects that the first full Fed hike is not priced until December, this year. Prior to the release of today's data, it was November. The chances of policy easing in September have also fallen. Particularly 'worrisome' for Fed policymakers could be a very strong reading from services, which unless revised sharply lower could suggest continued inflationary pressures in this sector of the economy. Today's dollar-supporting data:
- S&P Composite PMI: Currently: 54.4; Forecast. 51.1; Previously. 51.3
- S&P Manufacturing PMI: Currently: 50.9; Forecast. 50.0 Previously 50.0
- S&P Services PMI: Currently: 54.8; Forecast. 51.2; Previously. 51.3
- US Initial jobless claims: Currently: 215 k; Forecast: 220 k; Previously: 222 k.
Gold quotes are losing strongly for the second day in a row, triggered by expectations that the Fed will keep interest rates unchanged for longer. Nevertheless, it should be remembered that the recent historical peaks on gold were caused, among other things, by Powell's dovish verbiage during the last decision, which was reinforced by the inflation report. Currently, almost 2/3 of the May move has already been reduced. A weaker reading of activity in the Chicago region was partially offset by a stronger-than-forecast reading from Kansas.
'Sspooked' by the hawkish data, the stock market performed rather poorly, with the exception of large technology and semiconductor companies, where sentiment was supported by the Nvidia (NVDA.US) report. Downward pressure is particularly evident in gold prices, which have come under pressure from the dollar and yields, which for 10-year treasuries have already reached nearly 4.49% and are trading up 5 basis points. Also silver and copper prices are falling, with downward pressure seen on Chinese stock market futures.
GOLD (D1 interval)
Source: xStation5
