In the latter part of the North American trading session on Thursday, gold prices saw an uptick, buoyed by escalating geopolitical tensions involving Iran and Israel. Concurrently, hawkish statements from Federal Reserve (Fed) officials spurred an increase in US Treasury yields, thereby bolstering the US Dollar.
XAU/USD traded at $2,384, marking a gain of over 1%, after touching a daily low of $2,361. The focus shifted to major central bank speakers, overshadowing the release of US economic data, which painted an encouraging picture for the labor market.
Federal Reserve policymakers made notable remarks on Thursday. Raphael Bostic of the Atlanta Fed highlighted concerns about persistently high inflation, affirming that the central bank still has work to do in curbing it. He emphasized that rate reductions may not be feasible. Meanwhile, New York Fed President John Williams underscored the Fed’s data-dependent approach and expressed satisfaction with the current monetary policy stance, indicating a reluctance to rush into rate cuts. While Williams didn’t foresee rate hikes in his baseline scenario, he affirmed the Fed’s readiness to adjust policy if necessary.
Following Bostic’s commentary and positive US Initial Jobless Claims data, which remained unchanged compared to the previous reading, gold prices continued to climb.
In economic data releases, the US Department of Labor reported that Initial Jobless Claims for the week ending April 13 fell to 212K, surpassing expectations. However, Continuing Jobless Claims rose slightly but remained below forecasts. Additionally, the Philadelphia Fed Manufacturing Index exceeded expectations, while US Existing Home Sales declined.
Meanwhile, despite favorable US economic indicators, market focus remained on geopolitical tensions. Reports indicated a potential easing of tensions in the Middle East, coupled with the imposition of new sanctions on Iran by the US.
The US Dollar Index (DXY), which measures the dollar’s performance against a basket of currencies, experienced a modest decline.
Gross Domestic Product (GDP) estimates for Q1 2024 suggested a growth rate of 2.9%, according to the Atlanta GDPNow model, reflecting an upward revision from previous estimates.
In summary, gold prices rallied amidst geopolitical uncertainties and hawkish signals from the Fed, while market attention remained divided between economic data releases and geopolitical developments.
