Last week, we mentioned the buy sentiments of gold as a safe-haven asset.
Now that the market has priced banking crises what are the gold movement drivers?
Recession, yes fear of stagnation is remain. Fear of recession in the global economy remains and now the gold buyers are still in their long positions.
The UK economy grew in the last quarter of 2022 and avoided recession. England’s Office for National Statistics reported that gross domestic product, the value of all goods and services produced in England, increased by 0.6% in the fourth quarter of 2022, after falling by 0.1% in the previous quarter.
Inflation decreased in France in March, thanks to base effects on energy prices. Nevertheless, underlying inflationary pressures remain very high and food inflation will continue to rise. GDP growth will therefore likely remain weak, as confirmed by the falling consumer consumption in Februar
The latest report from the US Department of Labor shows that the number of jobless claims increased relatively last week. It rose 6,000 to 266,000 on a seasonally adjusted basis for the week ending March 26.
Inflation is expected to fall sharply in March due to lower energy prices, according to preliminary estimate data from Germany’s six economic states on Wednesday.
Gold traded above $2,000 on Monday but quickly fell to $1930
However, continued turmoil at banks and expectations that the Federal Reserve will be forced to cut interest rates this year helped gold rally again.
The Federal Reserve raised interest rates by 0.25%, much of which was priced in. But Federal Reserve Chairman Powell signaled that there would be another 0.25% hike before this contractionary cycle ends, which was a hawkish tone. but, there is not even a certainty that there will be another interest rate hike or not.
The European Central Bank took a less hawkish approach to its interest rate hike cycle at its March meeting compared to its February meeting.
The tension in the banking sector has led to a shift in the expectations of Federal Reserve interest rates. Markets have gone from pricing in a 100.0% increase in interest rates with no reduction this year to only a 17.0% increase with a 91.0% decrease this year
Quite simply, the balance sheet of the Federal Reserve or the balance sheet of the Central Bank of America is a financial statement that shows the assets and liabilities of the Federal Reserve. This balance sheet is published weekly and is called the H.4.1 statement of the Federal Reserve.
