Gold holds around $2,043 amidst US economic slowdown woes

The price of gold is rising, however it is still below the year’s highs, which were previously set at about $2,048.79, as US data showed the US economy is still slowing down. As a result, the US Dollar (USD) declined as US Treasury bond yields continued to decline, while Gold increased due to movements into safe-haven assets. After falling as low as $2,013.90, the XAU/USD is trading at $2043.19 at the time of writing.

As inflation declines, producers pay lower prices in the US. The March Producer Price Index (PPI) decreased 0.5% MoM, which was less than expected at 0%, according to the US Bureau of Labour Data (BLS).

The so-called core PPI, which does not include volatile goods, decreased by 0.1% MoM, less than the 0.3% consensus expectation. The PPI was 2.7% when compared year over year, less than the street’s prediction of 3%, but the core PPI remained constant at 3.4%. This put pressure on the American Dollar (USD), which is now down 0.61% at 101.913 according to the US Dollar Index.

US first claims for unemployment increased for a second week in a row. Initial Jobless Claims for the week ending on April 8, as published by the Bureau, again performed better than expected, coming in at 239K as opposed to 232K projections. That, along with continuously declining US inflation, put pressure on the US dollar and raised the price of gold, a safe haven asset, which is still hovering around the $2,040 level. With the exception of core, factory gate inflation in the US continues to decline. The number of claims for unemployment increased last week for the second week in a row.

T he US Dollar continued to be offered across the FX board and against commodities denominated in the US Dollar. Financial markets were flooded with expectations that the US Federal Reserve (Fed) is set to end its tightening cycle, with the Federal Funds Rate (FFR) expected to peak at 5.00% – 5.25%.

The probability of a 25 bps increase in May is 67.3%, although market participants have started to factor in rate decreases. Investors predict that the FFR will end 2023 in a range of 4.25% to 4.50%. As a result of May’s rate increase, 75 basis points of rate decreases are anticipated.

The Federal Reserve’s officials, led by San Francisco’s Fed Mary Daly, stated that “policy may have to tighten more to bring inflation down,” but they also admitted that there are good reasons why the economy “may continue to slow, even without additional policy adjustments.” Inflation has peaked, but Richmond’s Fed President Thomas Barkin earlier cautioned that there is still a long way to go.


The XAU/USD dropped after breaking the previous YTD high at $2,032.13, then presented another obstacle to achieving a new YTD high. Six days later, the Gold price reached a new YTD high, just missing the $2,050 psychological threshold. The XAU/USD needs to break through $2,050 in order to resume its bullish trend so that it can test the all-time high (ATH) at $2,075.14 before aiming for $2,100. On the other side, a break below the latter would be possible if XAU/USD fell down towards $2,000 in price. Once that occurs, the swing low from April 10 at $1,981.78, followed by the 20-day EMA at $1,981.25, would be the XAU/USD’s next support levels.