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CFD Markets News and Forecasts — 03-03-2024
- Gold price holds positive ground near $2,085.55 in Monday’s early Asian session.
- The US ISM Manufacturing PMI came in worse than expected, dropping to 47.8 in February from 49.1 in January.
- Fed’s Bostic said the central bank would cut rates in the summertime if the economy evolves as he expects.
Gold price (XAU/USD) rose to a nine-week high below the $2,100 mark during the early Asian trading hours on Monday. The downbeat US economic data on Friday triggered speculation about the interest rate cuts later this year. Additionally, the lower US Treasury yields added impetus to the rise in investor demand for the yellow metal. At press time, the gold price is trading at $2,085.55, unchanged for the day.
Data released from the Institute for Supply Management (ISM) on Friday showed that the US Manufacturing PMI dropped to 47.8 in February from 49.1 in the previous reading. The figure registered the 16th consecutive month that it remained below 50, which indicates a contraction in manufacturing.
The Federal Reserve (Fed) held the policy rate steady at the 5.25–5.50% range at its January meeting. Investors anticipated that the Fed to lower the rate by the end of 2024. Atlanta Fed President Raphael Bostic said he will monitor the longer-term trends and repeated his view that he sees the US central bank cutting rates in the summertime if the economy evolves as he expects. This, in turn, might improve the appeal of yellow metal and lift the price of gold.
Chinese Manufacturing sent mixed signals last month about the health of the economy. Investors will take more cues from the Chinese Caixin Services PMI for February on Tuesday. Additionally, the development surrounding the stimulus measure from the Chinese authorities could provide some support for the gold price.
Gold traders will keep an eye on the Chinese February Caixin Services PMI and the US ISM Services PMI on Tuesday. The Fed's Chair Jerome Powell testifies on Wednesday might offer some hints about a broad overview of the economy and monetary policy. On Friday, the US Nonfarm Payrolls (NFP) will be in the spotlight.
- AUD/USD weakens near 0.6525 despite the softer USD on Monday.
- The US ISM Manufacturing PMI fell to 47.8 in February vs. 49.1 prior, weaker than expected.
- The recent Australian inflation data supported the case for the RBA to begin cutting interest rates later this year.
The AUD/USD pair trades on a weaker note below the mid-0.6500s during the early Asian session on Monday. The pair loses traction despite the lower US Dollar (USD) and US yields. Investors await the release of Australian Gross Domestic Product (GDP) for the fourth quarter ahead of US Nonfarm Payrolls (NFP). AUD/USD currently trades near 0.6525, down 0.08% on the day.
On Friday, the US ISM Manufacturing PMI came in weaker-than-expected, falling to 47.8 in February from 49.1 in January. The New Orders Index declined to contractionary territory at 49.2, while the Production Index decreased to 48.4, and the Employment Index was at 45.9. Furthermore, the University of Michigan Consumer Sentiment Index eased to 76.9 from 79.6.
Atlanta Fed President Raphael Bostic said that he expected that the first cut in rates would be appropriate, probably at the end of this year at the earliest, as the Fed's preferred inflation gauge was continuing to ease. The financial markets have priced in the 70% odds that the Federal Reserve (Fed) will start cutting interest rates at the June meeting.
On the other hand, the Australian Consumer Price Index (CPI) rose 3.4% in January, below the market consensus of 3.5%. Australian inflation supported the case for the Reserve Bank of Australia (RBA) to begin cutting interest rates later this year. Apart from this, the Chinese Caixin Services PMI on Tuesday might influence market risk sentiment. The weaker-than-expected data could drag the Chinese-proxy Australian Dollar (AUD) lower and act as a headwind for the AUD/USD pair.
The Australian Building Permits is due on Monday, and the Judo Bank Composite PMI for February will be released on Tuesday. The highlight this week will be the Australian GDP growth numbers for Q4 and the US Nonfarm Payrolls (NFP). These events could give a clear direction to the AUD/USD pair.
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