Gold is taking off! XAUUSD closes over $2000 per oz

Gold shot higher on Tuesday, finally closing above the $2k per oz level for the first time in nearly a year, and is adding to gains on Wednesday morning. The price is being spurred by weak US economic data that has weighed on the dollar alongside high inflation. The Kiwi dollar was the top mover in forex markets after RNBZ made the surprise decision to raise rates by 50 basis points. Global stock markets mostly ended lower on Tuesday, snapping a multi-day win streak.

Key Factors for Today

- European markets to open flat to lower
- US futures point to modest gains on Wall Street
- Asian markets mixed on Tuesday, Nikkei lost -1.7%
- RBNZ hikes rates by 50 basis points, diverges with RBA
- US job openings fell to the lowest level in 2 years
- Services PMI data is out today

Market movers

- Gold rises over $2,200 per oz
- Silver hits $25 per oz
- WTI crude closes back over $80 per barrel
- S&P 500 rolls over at 4150 resistance
- FTSE 100 snaps 6-day win streak after touching 7700
- GBP/USD breaks out, hits 1.2500
- AUD/USD breaks out to over 1-month high

Econ Calendar

- German S&P Global Composite PMI(Mar) (8.55 am)
- UK S&P Global/CIPS Composite PMI(Mar) (9.30 am)
- ADP Employment Change(Mar) (1.30 pm)
- ISM Services PMI(Mar) (3 pm)
- ECB’s Lane speech (3 pm)

Earnings

- ConAgra Foods Inc
- Sodexo SA
- The Simply Good Foods Co
- Hilton Food Group PLC
- Bauer AG

Gold is on the move

After a 2-week consolidation, gold is breaking higher again, following the upside surge that took it from $1800 to $2000 per oz in 10 days during March. Recent economic data highlighting the risk of recession has only served to bolster the case for gold as a haven asset. On Wednesday, US job openings fell to a 2-year high as employers scaled back employment plans as demand slows heading into a likely recession.

As we highlighted when discussing the move higher in silver last week, precious metals are in a ‘goldilocks’ scenario of high inflation but falling interest rates. Bon and FX traders are sending yields and the dollar lower in expectation of a likely US recession and the risk of a more severe banking crisis, which would probably force the Fed to cut rates.

Silver just hit $25 per oz - its highest since April last year. The gold/silver ratio has also fallen rapidly over the past three days, showing silver’s relative strength versus gold. The breakouts of key resistance levels mentioned in yesterday’s note across FX markets have for the most part held, with new breakouts, notably including GBPUSD, now also in play. The pound has hit 1.25 to the US dollar, breaking out of the 600-pip range that has been in place since mid-December. The breakout implies a retest of 1.30 and possibly higher.

The Kiwi dollar extended recent gains after the RBNZ decided to raise rates by 50 basis points to 5.25% the highest in 14 years. In doing so it was breaking ranks with the RBA which sat pat in its decision yesterday (AUD/NZD has broken down decisively today).