【Market Morning】Gold falls back below $1,900, Dollar steady on mix of gains; Oil prices gain 1%
Gold falls back below $1,900, posting its first loss in 4 sessions; Dollar index steady on mix of gains, losses on major currencies; Oil prices gain 1%, boosted by U.S. economic data.Dow ends day more than 100 points higher amid solid jobs data, a jump in Boeing shares.

Yesterday Global Financial Market Review
Gold falls back below $1,900
Gold prices fell from the key level of $1,900 on Thursday to settle lower for the first time in four session, as the U.S. dollar steadied and U.S. Treasury yields moved higher, dulling the metal’s investment appeal.
The spot gold price closed at $1896.03 per ounce; The spot silver price closed at $27.853.
The correction in the gold prices is due to “month-end profit taking,” said Chintan Karnani, director of research at Insignia Consultants. “Traders booked some profit before they leave for the first mask-less vacation” in the U.S. this year.
“Gold prices reversed back in parallel with the rebounding U.S. dollar. What this suggests is that we are starting to see markets positioning ahead of Friday’s PCE report,” DailyFX currency strategist Ilya Spivak said, referring to monthly U.S. personal consumption data.
The dollar index rose to a one-week high against rivals, making gold more expensive for holders of other currency.
Market participants now await the monthly U.S. personal consumption report on Friday to gauge inflationary pressure. U.S. gross domestic product and jobless claims numbers are due later in the day.
“Gold remains vulnerable to a deeper pullback as its relative strength index has been overbought for the past few days, which is usually a strong corrective indicator,” OANDA senior market analyst Jeffrey Halley said.
“However, I don’t see gold falling below the $1,875 region ahead of the U.S. data. Gold remains well supported by perceptions that inflation has peaked, and lower U.S. yields.”
Dollar steady, losses on major currencies
The dollar index traded in a narrow range on Thursday as the greenback held steady against the euro, lost ground to the British pound and Canadian dollar and gained on the Japanese yen.
The U.S. dollar index closed at 89.99.
Also supporting the dollar, U.S. Treasury yields rose on concerns about the coming supply of government debt after the New York Times reported that President Joe Biden will announce on Friday a $6 trillion budget for 2022.
The yield on the 10-year note was up to 1.613 in the afternoon from 1.574 on Wednesday.
The yen, trading at 109.84 to the dollar, has lost 1% in two days since the Japanese government slashed its economic outlook for the first time in three months.
The British pound rose suddenly when a Bank of England policymaker said the central bank is likely to raise interest rates well into next year but that an increase could come earlier.
“The market is reacting to a hawkish headline and that’s why we saw sterling gallop,” said Erik Bregar, head of FX strategy at Exchange Bank of Canada.
Sterling’s strength helped to lift the Canadian dollar against the greenback, Bregar added.
The Bank of Canada has been quicker than other central banks to pull back support for economic growth.
China’s yuan appreciated to as much as 6.368 per dollar in offshore markets, a three-year high. Investors have been raising their bets on further strength, confident that the People’s Bank of China is not displaying discomfort with the rally.
Market attention now turns to U.S. inflation data due on Friday. A jump in prices could be seen as prompting the Fed to scale back its easy money policies.
Oil prices edge higher
Oil prices edged higher on Thursday, bolstered by strong U.S. economic data that offset investors’ concerns about the potential for a rise in Iranian supplies.
West Texas Intermediate crude settled at $67.246; International benchmark Brent crude closed at $69.142.
The number of Americans filing new claims for unemployment benefits dropped more than expected last week, according to data from the U.S. Labor Department.
The U.S. economy, which in the first quarter notched its second-fastest growth pace since the third quarter of 2003, is gathering momentum, with other data on Thursday showing business spending on equipment accelerated in April.
“That’s given us more of a risk-on attitude about the markets,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “We’re back to focusing on supply and demand.”
The prospect of Iranian supplies re-entering the market has pressured prices. Iran and global powers have been negotiating since April to work out how Tehran and Washington should secure the lifting of sanctions on Iran, including its energy sector, in return for Iranian compliance with restrictions on its nuclear work.
Those talks will be a major issue for a June 1 meeting of the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+. The producers will have to assess whether to change plans for easing production curbs against the prospect of additional Iranian supply.
Analysts said any increase in supply from Iran would be gradual, with JP Morgan estimating Iran could add 500,000 barrels per day (bpd) by the end of this year and a further 500,000 bpd by August 2022.
Concerns also remain about demand in India, the world’s third-largest oil consumer. India has been hard-hit by the coronavirus, and only about 3% of its population has been fully vaccinated, according to the Reuters vaccine tracker.
U.S. stocks end mostly higher
he Dow Jones Industrial Average and the S&P 500 climbed on Thursday as investors cheered stronger-than-expected labor-market data.
The S&P 500 inched up 0.1% to 4,200.88. The Nasdaq Composite ended the session flat at 13,736.28. Shares of Boeing advanced 3.9% on optimism about an economic recovery.
Gains for the overall market were capped however, as investors lightened up on technology shares as they rotated into cyclical stocks. Microsoft, Alphabet and Apple all registered losses.
Snowflake shares fell 4.2% after the data-analytics software company reported widening losses. Nvidia’s stock dipped 1.3%, even after the chip giant’s earnings and sales for the first quarter both beat Wall Street expectations. Its revenue grew 88% compared to last year.
Meme stocks, which have jumped this week amid a resurgence in speculative trading, turned higher again on Thursday. GameStop gained 4.8%. AMC Entertainment erased earlier gains and popped another 35%.
Ford was higher again, with the stock up 7% following an upgrade by RBC. The stock jumped 8% on Wednesday after unveiling its electric vehicle strategy.
Thursday’s moves followed a relatively quiet session on Wall Street. The S&P 500 eked out a 0.2% gain in light trading during the prior day, supported by gains in shares tied to the economic reopening including airlines and cruise line operators. The blue-chip Dow finished Wednesday’s session little changed, while the tech-heavy Nasdaq Composite gained 0.6%.
“Equity markets are quiet as investors continue to anticipate the Fed’s next move,” said Mark Hackett, chief of investment research at Nationwide. “Low volatility and low trading volume are a frequent occurrence in the week leading into a holiday.”
Focus Today
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20:30(GMT+8): United States Core PCE Price Index YoY (APR), Forecast: 2.9%, Previous: 1.8%;
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