【Market Morning】Gold retakes $1,900, dollar firms, Oil ends lower
Non-farm Payroll and other economic data are coming this week, Investors are requested to make position adjustments and risk aversion in advance; Oil price ends lower, but posts a weekly gain; S&P 500 gains slightly to wrap up 4th straight positive month.

Yesterday Global Financial Market Review
Gold price retakes $1,900/oz after U.S. inflation ticks up
Gold reversed course and turned positive on Friday, popping above the key $1,900 level, after data showed U.S. consumer prices surged in April and boosted bullion’s appeal as an inflation hedge.
The spot gold price closed at $1903.75 per ounce; The spot silver price closed at $27.914.
U.S. consumer prices accelerated in the year to April, with a measure of underlying inflation blowing past the Federal Reserve’s 2% target.
“We saw a slight uptick in the personal consumption data... All these things continue to support an underlying inflationary environment that is very favourable towards gold,” said David Meger, director of metals trading at High Ridge Futures.
The refusal of the Federal Reserve to reduce the pace of their bond buying program or move higher on rates is also supportive for gold, although some psychological resistance at the $1,900 level and a stronger dollar is acting as a headwind, he added.
The dollar index pared gains, making gold less expensive for other currency holders, while U.S. yields edged lower, translating into reduced opportunity cost of holding bullion.
The White House unveiled a $6 trillion budget proposal that would ramp up spending on infrastructure, education and combating climate change.
The technicals are supportive, so any weakness in the prices will be looked at as a buying opportunity, Eli Tesfaye, senior market strategist at RJO Futures said.
If the U.S. economy recovers quickly and inflation continues to heat up, gold will be in ample demand, he added.
Dollar steady, losses on major currencies
The dollar hit a seven-week peak against the yen and firmed on other majors as traders braced for what is expected to be a robust U.S. inflation figure on Friday, while the Chinese yuan extended gains to head for its best month since November.
The U.S. dollar index closed at 90.04.
The dollar strengthened on Friday and was on track for a weekly gain as investors waited for U.S. inflation data to set the currency's direction.
The U.S. dollar has fallen in April and May so far, reaching its lowest in more than four months, but has changed course this week, picking up in a move which analysts said was due to month-end flows.
Versus the yen, the dollar hit a seven-week high. The pair changed hands at 109.935, with analysts noting Japan's rise in unemployment and fall in consumer prices. Japan extended its state of emergency in Tokyo and other areas by about three weeks, as the COVID-19 pandemic shows no signs of easing.
Currency market participants are focused on the outlook for inflation and central bank monetary policy.
The European Central Bank struck a dovish tone this week, slowing the euro's momentum ahead of the policy meeting on June 10.
The euro was down 0.1% at $1.2178, compared to the four-month high of $1.2266 it hit earlier in the week.
The Australian dollar was down 0.4% at 0.77105. Analysts are eying the Reserve Bank of Australia as a possible next central bank to turn hawkish.
The British pound was down 0.2% at around $1.41680, on track for its best month versus the dollar so far this year.
A Bank of England policymaker said on Thursday that the central bank could raise interest rates as soon as the first half of next year, but is more likely to wait until later in 2022.
Oil price ends lower
Oil prices fell slightly on Friday but posted a weekly advance as strong U.S. economic data and expectations of a rebound in global demand outweighed concerns about more supply from Iran once sanctions are lifted.
West Texas Intermediate crude settled at $66.497; International benchmark Brent crude closed at $68.909.
“Boosted by good economic data and risk appetite among investors on the financial markets, Brent is making a renewed bid for the psychologically important $70 per barrel mark,” said Commerzbank analyst Eugen Weinberg.
“Concerns about demand because of the pandemic are giving way to optimism in view of the rapid return of consumers,” he added.
Analysts expect global oil demand to rebound closer to 100 million barrels per day in the third quarter on summer travel in Europe and the United States following widespread COVID-19 vaccination programmes.
“Gasoline demand has now exceeded 2019 levels in many areas,” ANZ analysts said in a note.
Robust economic data from the United States, the world’s largest economy and oil consumer, also lent support as the number of Americans filing new claims for unemployment benefits fell to the lowest since mid-March 2020, beating estimates.
Rising coronavirus infections in Asia put pressure on prices. Infections in the South Asia region surpassed 30 million on Friday, according to a Reuters tally, led by India which is struggling with a second COVID-19 wave and a vaccine shortage across the region.
The prospect of more Iranian oil coming on to the markets also capped the gains.
“Iran is going to slow down the rally,” said Bob Yawger, director of energy futures at Mizuho in New York, adding that market participants were being cautious heading into the weekend on the possibility that a deal between Iran and Western powers could inject more supply into the market.
Iran and global powers have negotiated in Vienna since April to work out steps that Tehran and Washington must take on sanctions and nuclear activities to return to full compliance with Iran’s 2015 nuclear pact with world powers.
Within the United States, Yawger said concerns about the potential for demand on this Memorial Day holiday weekend being lackluster. “There are some areas of concern,” he said.
S&P 500 gains slightly
The S&P 500 climbed slightly on Friday to close its fourth straight positive month amid growing optimism over the U.S. economic recovery.
The Dow Jones Industrial Average gained 64.81 points to 34,529.45. The tech-heavy Nasdaq Composite inched up 0.1% to 13,748.74.
The blue-chip Dow and the S&P 500 advanced 0.9% and 1.2% this week, respectively, both breaking a two- week losing streak. The Nasdaq rose 2.1% to post its best weekly performance since April 9.
For the month of May, the 30-stock Dow and the S&P 500 gained 1.9% and 0.6%, respectively, posting their fourth up month in a row. The tech-heavy Nasdaq, however, suffered a 1.5% loss this month for its first negative month in seven.
Salesforce shares popped more than 5% Friday to lead the gains in the Dow. The rally came after the software company’s first-quarter earnings beat Wall Street expectations on its top and bottom lines.
Meme stocks fueled by traders in Reddit’s WallStreetBets forum had another roller-roaster session Friday with AMC shooting up as much as 38% and closing the day down 1.5%. GameStop erased earlier gains and dropped 12.6%.
This week, investors also monitored the back-and-forth in Washington over a comprehensive infrastructure package that could further boost the economic recovery. Senate Republicans unveiled a $928 billion infrastructure counteroffer to President Joe Biden on Thursday. However, that’s well below Biden’s most recent proposal of $1.7 trillion.
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20:00 (GMT+8): Germany Inflation Rate YoY Prel (MAY), Forecast: 2.4%, Previous: 2%;
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