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Gold finished slightly lower last week, pressured by a rebound in the U.S. Dollar, a surge in Treasury yields and increased appetite for risk. Early in the week, gold prices were supported by concerns over a slowing global economy and muted U.S. inflation data, but conditions changed after a U.S. report confirmed a strong labor market and China reported better-than-expected trade balance data. Both pieces of information helped dampen concerns over a global economic slowdown, which made gold a less-desirable asset.
Last week, June Comex Gold settled at $1295.20, down $0.40 or -0.03%.
Bullish Influences
Muted U.S. Inflation Data Supportive
On the economic front, U.S. consumer inflation increased by the most in 14 months in March, but the underlying inflation trend remained muted amid slowing domestic and global economic growth.
According to the U.S. Labor Department, the Consumer Price Index rose 0.4 percent. In the 12 months through March, the CPI increased 1.9 percent. Economists had forecast the CPI rising 0.3 percent in March and accelerating 1.8 percent year-on-year.
The Core CPI inched up 0.1 percent. In the 12 months through March, the core CPI increased 2.0 percent. The core CPI rose 2.1 percent year-on-year in February.
The Labor Department also reported that U.S. producer prices increased by the most in five months in March, but underlying wholesale inflation was muted.
The producer price index for final demand rose 0.6 percent last month. In the 12 months through March, the PPI rose 2.2 percent. Economists had forecast a reading of 0.3 percent in March and an increase of 1.9 percent on a year-on-year basis. The core PPI increased 2.0 percent in the 12 months through March.
Dovish Fed Minutes Priced into Market
The latest minutes of the U.S. Federal Reserve’s March 19-20 policy meeting, showed most policymakers viewed price pressures as “muted,” but expected inflation to rise to or near the central bank’s 2 percent target. However, the minutes offered no surprises for investors so stock prices remained stable. If anything, the minutes reinforced the view that rates are likely to remain on hold for the foreseeable future.
Bearish Influences
U.S. Jobless Claims Decline to Nearly 50-year Low
The Labor Department also reported that the number of Americans filing applications for unemployment benefits dropped to a 49-1/2 year low the week-ending April 6. Initial claims for state unemployment benefits fell 8,000 to a seasonally adjusted 196,000. Traders were looking for an increase to 211,000.