Gold prices plunged to a ten-day low, nearing $2,880 on Thursday, as economic indicators from the United States offered mixed signals to investors. The US Census Bureau reported a stronger-than-expected rise in durable goods orders for January, climbing by 3.1% to reach $286 billion. This increase was primarily driven by transportation equipment, which surged by $8.6 billion or 9.8%, totaling $96.5 billion.
In the foreign exchange markets, the US Dollar Index showed modest gains, rising 0.16% to 106.65. The GBP/USD pair faced downward pressure, trading below 1.2700 during European sessions on Thursday. Analysts attribute this trend to uncertainty surrounding US tariffs, which President Trump discussed ambiguously during a recent cabinet meeting. His comments left markets guessing about potential levies' timing and scope, contributing to currency market volatility.
Transportation equipment played a significant role in the unexpected rise of durable goods orders. Despite these gains, orders excluding transportation remained flat.
"Excluding transportation, new orders were virtually unchanged," – The Census Bureau
This fact underscores that the transportation sector's growth was pivotal in driving the overall increase.
The US Dollar's valuation appeared unaffected by the durable goods data, indicating other factors may be at play in influencing its current strength. Market observers noted that disinflation trends are becoming more pronounced across Europe, particularly in France, where regulated electricity prices saw a notable reduction. Nevertheless, inflation persists in the service sector both in France and the broader Eurozone.
Despite the robust figures for durable goods, orders outside of transportation showed little movement.
"Excluding defense, new orders increased 3.5%. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $8.6 billion or 9.8%, to $96.5 billion." – The Census Bureau
This suggests resilience in specific sectors amidst broader economic challenges.
The GBP/USD pair's struggles might also be linked to uncertainties surrounding US trade policies. President Trump's recent statements have cast doubts over future tariff implementations, contributing to unease in the currency markets.
Meanwhile, gold's decline reflects a broader investor sentiment shift as they digest these economic developments. The precious metal often reacts to fluctuations in currency values and global economic conditions.