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The gold price is down on the day, losing around 1.9% as the US stock market rises later in the day for a positive close in hopes of a breakthrough in peace talks surrounding the Ukraine crisis.
The market mood was sour, helping the American dollar to end the day with gains against most major rivals.
Meanwhile, the US dollar was a touch shorter in the US session as well following mixed data and softer US yields that started to decline in the European session with the 2-year yields sliding from 2.414% to a low of 2.292% by very early North American trade.
Economic Data
The Dallas Fed’s manufacturing activity index fell to 8.7 in March from 14 in February, in contrast to other regional data that indicated expansion in the sector.
The ISM’s national index will be released on Friday. Additionally, the trade gap narrowed 0.9% to $106.6 billion in February amid higher exports. The updated trade data for the month will be released on April 5. Lastly, Wholesale Inventories rose by 2.1% in February and retail inventories by 1.1%. Wholesale inventories will be updated on April 8, while retail inventories will be updated on April 14.
Other Developments
The Biden administration on Monday unveiled the budget proposal for 2023.This will be totaling more than $5.7 trillion in spending and including a new tax on billionaires. This comes just weeks after Congress passed the omnibus spending bill for the rest of 2022.
Russia deescalated the language used against Ukraine and instead, in ceasefire talks, signaled intention to allow Kyiv to join the EU if it abandons NATO aspirations. Moscow & Kyiv will discuss a pause in hostilities at talks in Turkey on Tuesday and draft documents do not contain three of Russia’s initial core demands as well as legal protection for the Russian language in Ukraine.
However, when it comes to the possibility of a Putin-Zelenskiy meeting, the Kremlin says there has been no progress. The Russian Foreign Minister Lavrov said recently that any meeting between Putin and Zelenskiy to exchange views currently would be counter-productive.
On Monday, OPEC+ group was reportedly expected to stick to the May oil output plan increase plan at the March 31 meeting as several international calls are increasingly urging to keep the group out of politics.
“The Saudis are careful,” sources told Reuters. “They don’t want to hike oil output above plan in order not to show they are against Russia”.
Oil prices continue to push lower after this headline. West Texas Intermediate (WTI) crude was trading at $105.00, losing 6.8% on a daily basis.
The S&P 500 rose for a third day on Monday while Russia and Ukraine were poised to hold their first face-to-face peace talks in more than two weeks. According to the preliminary data, the S&P 500 gained 32.37 points, or 0.71%, to end at 4,575.43 points, while the Nasdaq Composite gained 184.43 points, or 1.30%, to 14,353.73. The Dow Jones Industrial Average rose 92.80 points, or 0.26%, to 34,954.04. The S&P was able to rebound from declines earlier in the session, with the benchmark index falling as much as 0.6% at one point.
This comes as rates markets are readying for the Federal Reserve to deliver a hawkish surprise to markets, sending a strong signal that markets are increasingly pricing in a Fed that is willing to overshoot the neutral rate in order to bring inflation under control. In this context, gold prices have remained incredibly resilient, reflecting that strong ETF inflows into gold are trumping outflows associated with a hawkish Fed, which is in turn creating a divergence between gold and rates markets.”
As for the economic calendar for the week ahead, the US jobs market and eurozone inflation data will be keenly eyed. The US Nonfarm Payrolls at the start of the new month on Friday is likely to show that Employment continued to advance in March following two strong reports averaging +580k in January and February.
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