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CFD Markets News and Forecasts — 12-05-2024
- Gold price kicks off the new week on a positive note around $2,360 on Monday.
- The hawkish comments from the US Fed might weigh on the yellow metal.
- The escalating Middle East geopolitical tensions could cap the downside of the gold price.
The gold price (XAU/USD) extends its upside near $2,360 on Monday during the early Asian trading hours. The rising geopolitical tensions in the Middle East boost safe-haven flows and benefit precious metals. Later this week, the US Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales will be in the spotlight and might offer some hints about the economic outlook and inflation trajectory.
Several US Federal Reserve (Fed) officials delivered hawkish messages last week. Atlanta Fed President Raphael Bostic said that she didn’t expect it would be appropriate for the Fed to cut interest rates in 2024, citing elevated inflation in the first several months of the year. Minneapolis Fed Neel Kashkari noted that he is in “wait and see mode” about future monetary policy.
US consumer sentiment fell sharply in May to the lowest level in six months amid stubbornly high inflation. The preliminary US University of Michigan’s Consumer Sentiment Index declined to 67.4 in May from a final reading of 77.2 in April, below the market consensus of 76.0. The final reading of US CPI inflation for April is expected to ease to 3.4% YoY in April from the previous reading of 3.5%. The hotter-than-expected data might dampen hope for US rate cuts and drag the gold price lower.
On the other hand, the Israeli military said that it launched operations in northern Gaza overnight and that "precise operations" are ongoing in eastern Rafah and near the Rafah border, as well as in the Zeitoun neighbourhood in central Gaza. The military engagement in Rafah occurs before a full-scale invasion, per CNN. The ongoing geopolitical tension in the Middle East might lift the price of precious metals, a traditional safe-haven asset.
- AUD/USD trades with mild positive bias near 0.6605 on Monday.
- Fed officials reiterated on higher-for-longer mantra, supporting the USD against its rivals.
- Australia's government stated inflation could moderate to the RBA's target range by the end of 2024, faster than predicted in December.
The AUD/USD pair posts modest gains around 0.6605 during the early Asian session on Monday. Investors await the key US economic data this week for fresh catalysts, including the Consumer Price Index (CPI), Producer, Price Index (PPI), and Retail Sales.
On Friday, San Francisco Fed President Mary Daly highlighted the need for prolonged restrictive policy to achieve the Fed's inflation targets. Meanwhile, Atlanta Fed President Raphael Bostic said that the central bank is probably still planning to cut its interest rates this year, despite the uncertain outlook. The cautious approach from the US Federal Reserve (Fed) provides some support for the US dollar (USD).
Elsewhere, consumer sentiment tumbled as inflation fears rose, according to the University of Michigan Survey on Friday. The initial reading of the Consumer Sentiment Index came in at 67.4 in May from 77.2 in April, weaker than the expectation of 76.0. The one-year inflation outlook jumped to 3.5%, while the five-year outlook rose to 3.1%. Both figures registered the highest level since November 2023.
On the Aussie front, Australia’s Treasury said on Sunday that they projected that inflation could return to the Reserve Bank of Australia’s (RBA) target band before the end of 2024. In the December outlook, the officials projected CPI inflation to slow to 3.75% by mid-2024 and 2.75% by mid-2025, putting it back in the RBA target band.
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