Gold prices suffered heavy losses early this week as tensions between Israel and Iran continued to abate. Over the weekend, Tehran stated it had no retaliatory intentions against its long-standing adversary, despite further suspected attacks on Iranian soil. The reconciliatory tone did nothing to bolster the safe-haven narrative associated with gold, which has witnessed a meteoric rise over the past couple of months. The precious metal lost 2.7% on Monday and went on to endure further selling pressure on Tuesday following an unexpected drop in business activity in the US.
The S&P Global Manufacturing PMI fell to 49.9 in April compared to 51.9 for the previous month, technically placing it in contraction. The Global Services figures also came in lower than expectations at 50.9 compared to 51.7 in March. It is the first data print to show a loss of momentum in the US economy and will offer a glimmer of hope to investors betting on the Federal Reserve to finally nudge interest rates lower. Those hoping to see a more dovish stance from the Fed will also have their gaze firmly trained on Friday’s Core PCE Price Index numbers.
The data print was enough to push the Dollar Currency Index 0.4% lower yesterday, losing the 106 level it had maintained for most of last week. Despite weakness in the Dollar, pressure on the Yen did not subside, USDJPY edging as high as 154.8 ahead of the Bank of Japan’s interest rate decision on Friday.
Earnings week is upon us for many US companies, and already traders are piling into tech stocks, triggering rallies in all major indices with the Nasdaq Composite predictably leading the way. The index clawed back a decent chunk of the gains surrendered last week, gaining 1.1% and 1.6% over the past two sessions, the S&P 500 and Dow Jones also seeing a rebound after recent poor price action.
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