On Thursday, Spot Gold prices jumped over the $3,200 level in the US trading session. Earlier in the day, they had slid to a five-week trough of $3,120.83 in London. Those price moves further indicate that volatility is still very much alive in the gold market. It’s US economic data that is pushing that trend.
The latest weakening of USD was countered by optimistic economic data coming out of the US. In March, the Wholesale Price Index decreased by 0.4%. In April, the Producer Price Index (PPI) fell by 0.5%. Nonetheless, it still registered a 2.4% year-on-year increase. Both figures were well below expectations and below March’s revised totals. This led to further market speculation regarding inflation and economic growth.
Along with the disappointing PPI data, Initial Jobless Claims for the week ending May 10 jumped to 229,000. This figure came in just as spot on with market expectations as the above. The increase in claims signals potential hurdles in the labor market. The USD soared, courtesy of other, more positive economic signals.
Retail Sales data for April came in slightly higher than expected at 0.1%, when market participants were expecting flat month over month growth. This modest increase offers a ray of hope concerning the direction of consumer spending—the lifeblood of our economic expansion. Together, these economic indicators have resulted in relatively mixed sentiment from investors, who continue to watch carefully for signs of more to come.
Continuing with its economic strategy, the US government is looking to amend its bilateral trade agreement with Japan. The US wants more concessions from Japan on tariff line items, especially in agriculture and livestock products, but Japan is said to be resisting these demands. This ongoing stalemate may be damaging for bilateral trade relations and larger economic shifting sands.
Looking forward, all eyes of the market are tuned toward the release of the US Michigan Consumer Sentiment Index for May this Friday. This index is expected to provide further insights into consumer confidence and spending behavior, which are critical components of the economic landscape.