Spot gold prices (XAUUSD:CUR) hit yet another record high at the start of the month on Monday, after U.S. inflation data showing easing prices bolstered bets that the Federal Reserve could cut interest rates in June. Gold (XAUUSD:CUR) hit an all-time high at $2,262.19 an ounce earlier in the session.
Further supporting the nonyielding asset, benchmark U.S. 10-year bond yields (US10Y) pulled back.
Friday’s core PCE report, running at +2.8% Y/Y in February, was “pretty much in line with our expectations… it’s good to see something coming in line with expectations,” said Federal Reserve Chair Jerome Powell during an interview to the San Francisco Fed’s Macroeconomics and Monetary Policy Conference on Friday.
Growth is strong right now,” and the Fed will be careful about its decisions. The strong growth means the central bank doesn’t need to be in a hurry, Powell added.
Bullion, which pays no interest, becomes an attractive option in a low-interest rate environment. Gold registered its biggest monthly rise in more than three years in March, boosted by central bank buying and rate-cut bets.
The World Gold Council in a recent report concluded that, gold’s position as an investment and a luxury good has allowed it to deliver annualised returns of nearly 8% since 1971, comparable to equities and more than bonds and commodities.
“Gold’s traditional role as a safe-haven asset means it comes into its own during times of high risk. But its dual appeal as an investment and a consumer good means it can generate positive returns in good times too. This dynamic is likely to continue, reflecting ongoing political and economic uncertainty, and economic concerns surrounding equity and bond markets,” WGC added.
Turning to energy commodities, Brent crude oil prices (CO1:COM) were trading lower after three-straight week of gains, WTI futures held firm, while natural gas prices shed more than 2%.
Expectations of tighter supply from OPEC+ cuts and attacks on Russian refineries have supported prices of oil, with robust Chinese manufacturing data adding to gains.
Russian Deputy Prime Minister Alexander Novak said on Friday that the country’s oil companies will focus on reducing output rather than exports in the second quarter in order to evenly spread production cuts with other OPEC+ members.
U.S. crude oil production dropped in January to 12.5 million barrels per day (bpd), a 6% decline from December’s record high, following freezing weather, data from the Energy Information Administration showed on Friday.
Last week, the rig count in the five major tight oil basins remained flat, as the Permian gained one, the Niobrara lost one and all others remained flat, J.P. Morgan said in a note.
In the first quarter of 2024, the headline oil rig count rose by six rigs, while the core basin count increased by nine. “Oil drilling in the major oil basins is running ahead of the overall oil rig additions as producers focus on drilling in the most oil-heavy regions. By the end of June, we expect an additional 16 oil rigs to be added in the major tight oil basins,” JPM said in a note dated March 29.
Potential stocks to watch: REX American Resources (REX) +34%, Atlas Lithium (ATLX) +14%, Seabridge Gold (SA) +9%, Novagold Resources (NG) +9%, Ivanhoe Electric (IE) +8%, Hecla Mining (HL) +7%, MAG Silver (MAG) +7%, Chemours Company (CC) -9%, Materion Corp (MTRN) -5%.
Recent Commodity Price Movements and A look At Some ETFs
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Energy
Metals
Agriculture
Commodity ETFs
Gold ETFs:
Other Metal ETFs:
Oil ETFs:
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