Summary:
Gold prices stabilized as US producer prices soared in April, while the US dollar and Treasury yields retreated.
Gold prices were unchanged on Wednesday following a rebound driven by a pullback in the dollar and Treasury yields after data showed US producer prices rose more than expected in April.
Bullion has gained around 14% this year, outperforming all major stock indexes in dollar terms. The world's bond market remains fragile with central banks' caution on inflation, polishing up the metal despite high yields.
Fed Chair Jerome Powell said he expects inflation to continue declining through the year as it did last year and noted it was unlikely the Fed would have to raise interest rates again.
According to the World Bank, strong demand from several EMDE central banks and increased activity in ETFs in China amid heightened geopolitical tensions have been supporting the price surge.
Notable, China's central bank extended its gold purchases for the 17th consecutive month in March to diversify away from dollar reserves, setting a record for the longest reported streak of monthly purchases.
Industrial and tech demand for gold surged in Q1, helped by a recovery in the electronics sector, according to data compiled by the WGC. The trend is expected to continue thanks to AI boom.
The XAUUSD has been stuck in a tight range for over a week with potential support at its 50 SMA. A push above $2,380 may lead to a sustained rally towards $2,400.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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