03 Apr
Investors’ pullback on bets for further monetary tightening boosts silver gains.
- Silver prices rose by 0.62% to reach 72218, as investors reduced bets on further monetary tightening by the US Federal Reserve after inflation slowed down in February.
- The Fed’s preferred inflation measure, the core PCE price, dropped to 4.6%, the lowest in 15 months. Although Fed policymakers suggested the need for more tightening, money market bets show only a 50% chance that the central bank will raise rates by 25 basis points in May and pause afterward.
- Minneapolis Fed President Neel Kashkari emphasized the need to bring inflation back to 2%. U.S. consumer spending rose moderately in February, and although inflation cooled down, it remained elevated enough for the Fed to raise interest rates once more this year.
- The market is technically under fresh buying, with support at 71649 and resistance at 72698.
Gold:
- Following a solid first quarter, gold prices experienced a slight pullback on Monday, as investors locked in some profits.
- However, the market’s focus now shifts to several US economic readings scheduled for this week, which will provide cues on monetary policy. Gold prices surged over 7% in the first quarter, driven by safe-haven demand amid fears of a US banking crisis.
- Despite some profit-taking, gold prices remain underpinned, with spot gold hovering below $100 of the 2020 record high.
- Nonfarm payrolls data for March, due on Thursday, will be closely monitored for signs of weakness in the labor market, which could lead to a less hawkish Federal Reserve. Such a scenario would be positive for gold, which has become a preferred haven over the past month.
- Meanwhile, the dollar’s recovery and strength in Treasury yields weighed on metal markets. Platinum and silver futures declined, while copper futures fell due to China’s slowing manufacturing growth, indicating an uneven economic recovery that could dampen its commodity appetite.
