Price Performance Indicators

Gold focus :

1. The ICDX gold price strengthened 0.63% in the week (10/04 - 14/04).
2. IMF Global GDP projections and US inflation data.

Market Review

The ICDX gold price jumped by 0.63% compared to the previous week as the International Monetary Funds (IMF) projecting more pessimistic global growth and US inflation data encouraging the US central bank may halt its policy after one more rate hike.

The IMF in its World Economic Outlook, April 2023 predicts global GDP growth of 2.8% in 2023 and 3.0% in 2024, marking a sharp decline from 3.4% growth in 2022. The 2023 and 2024 projections are reduced by 0.1% from the outlook issued last January. The IMF also added that the turmoil in the banking system following the failures of two US regional banks and Credit Suisse which had been restrained from contagion by strong policy actions added another layer of economic uncertainty amid high inflation and the fallout from the Russia-Ukraine war. The IMF forecasts 2023 core inflation to be 5.1% from the previous prediction of 4.5%. The more pessimistic outlook for global growth amid economic uncertainty increases the attractiveness of gold as a safe-haven asset.

US Consumer Price Index in March eased on an annual basis from a 6.0% gain in February to 5.0%. The US CPI on an annual basis peaked at 9.1% in June last year which prompted the US central bank to adopt a tight monetary policy with the target of bringing inflation down to 2%. The US Producer Price Index in March was also reported to have fallen to -0.5% month-on-month, lower than the expected 0.0%. The February PPI was revised to 0.0% from -0.1% previously reported. The US Department of Labor report showed the number of workers filing new claims for unemployment benefits increased to 239K from last week's report of 228K, also higher than the projected 233K.

Market View

The Fed's Meeting Minutes and Prospects for the US Federal Reserve's Interest Rate Hike

US central bank monetary policy updates, The minutes from the Fed's March meeting showed some policymakers considering halting interest rate hikes due to fears of wider financial pressures from the failures of two US regional banks. In the end, policy makers concluded that high inflation remained a priority and saw how regulators had calmed the banking sector with emergency measures. The minutes show that the SVB and Signature Bank failures sparked renewed caution with officials ignoring consideration of a half percentage point hike. The Fed assesses the potential for a mild recession due to pressure on the financial sector starting at the end of this year with recovery in 2024 - 2025. Projections at the meeting showed most policymakers favor one more rate hike before calling it pauses.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research