Price Performance Indicators

Gold focus :

1. ICDX gold prices weakened 1.10% in the week (12/2-16/2).
2. Market sentiment anticipates that the Federal Reserve will likely maintain interest rates until June.

Market Review

ICDX gold prices weakened to $2,157.86 per Troy Ounce compared to the previous week, influenced by a series of robust US economic indicators that tempered expectations of a Federal Reserve interest rate reduction.

The US Department of Labor reported a surprising increase in US inflation on 12th March, with the Consumer Price Index (CPI) reaching 3.2% year-on-year in February. Core CPI, excluding volatile food and energy prices, surged by 0.4% month-on-month and 3.8% year-on-year, surpassing market projections. This inflationary trend in February's CPI data is pivotal in shaping the Federal Reserve's interest rate outlook. Consistent months of stronger-than-anticipated inflation have effectively eliminated the possibility of a Federal Reserve rate cut before June, compelling the Fed to maintain its stance on sustained higher rates.

Geopolitical tensions escalated with Russian President Vladimir Putin's statement on 13th March, warning of significant escalation if the US deploys troops to Ukraine and expressing readiness for nuclear conflict. Moreover, incidents such as an Israeli strike on a UN aid distribution center in Rafah and clashes in the Bekaa Valley involving Lebanon's Hezbollah fighters added to geopolitical uncertainties, bolstering demand for safe-haven assets.Other US economic data on 14/3 showed that the Producer Price Index (PPI) for final demand in the US rose 1.6% on an annual basis in February. This figure followed the 1% increase recorded in January (revised from 0.9%) and was above market expectations of 1.1%. Annual Core PPI rose 2% in the same period, matching January's rise. On a monthly basis, Core PPI rose 0.3%, versus analyst estimates of 0.2%. On the same day, Retail sales in the US increased again in February, according to a report released by the US Department of Commerce although the increase fell short of economists' estimates. The Commerce Department said retail sales rose by 0.6 percent in February after slumping by 1.1 percent in January. Economists expect retail sales to increase by 0.8 percent compared with a 0.8 percent decline reported in the previous month.

Market View

The Federal Reserve

The Federal Reserve, during its meeting on Wednesday, opted to maintain interest rates at 5.25%-5.50% for the fifth consecutive time. However, policymakers indicated their anticipation of a three-quarters of a percentage point rate cut by the end of 2024. This decision aligns with the dot plot released last December, signaling that Fed officials projected three interest rate cuts. Furthermore, the Federal Reserve's Summary of Economic Projections in December outlined policymakers' expectations for a 1.4% GDP growth and a 4.1% Unemployment Rate in 2024. The Core Personal Consumption Expenditures (PCE) Price Index is forecasted to decline to 2.4% in 2024, consistent with general PCE forecasts.

China's Economic Performance

According to the National Bureau of Statistics (NBS) report on 3/18, China's January-February Retail Sales surged by 5.5% year-on-year, surpassing the 5.2% forecast and the 7.4% recorded in January. Concurrently, the country's Industrial Production rose to 7.0% year-on-year, exceeding the 5.0% forecast and the 6.8% previously recorded. Additionally, Fixed Asset Investment saw a 4.2% year-on-year increase in January-February, surpassing the 3.1% expectation and the 3.0% seen in December. China's finance minister, Lan Fo'an, emphasized the importance of a proactive fiscal policy to bolster the country's economic recovery and support its economic objectives.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research