Giorno: 30 Maggio 2024

While the expectations for rate cuts have diminished lately amid persistently high inflation, gold prices have continued to exhibit strength due to various underlying positive factors, Macquarie commodity strategists said in a report.

The research firm observed that gold prices have reached new highs, driven by dynamics other than U.S. interest rates and the dollar. The yellow metal has benefited from a broader risk-on sentiment in the metals markets.

Gold prices have been outperforming across various asset classes and on a macroeconomic level. It is implicitly trading on its reputation as a safe asset with no counterparty risk, rather than the opportunity cost associated with holding a zero-yield asset.

Moreover, gold prices have been supported by risk assets. Macquarie highlighted that central bank buying of gold is still tracking above reported levels, suggesting sustained institutional interest in the precious metal.

The derivative markets for gold remain long, especially when measured in U.S. dollar notional amounts rather than in lots. However, the market positions are believed to be less overstretched following two recent price corrections.

Trading volumes on the Shanghai Futures Exchange (SHFE) have settled down after a significant increase in April, but the China “arbitrage” remains high, indicating continued interest and activity in the gold market from Chinese traders.

The resilience of gold prices, despite a stronger dollar supported by relative U.S. monetary policy divergence, indicates that investors are looking beyond just the U.S. rate market when it comes to gold.

Elsewhere, industrial metals have also seen a catch-up to gold’s performance, as reflected in the gold/silver ratio, with gold setting the pace for commodities and now industrial metals taking the lead.

Investing.com — The U.S. economy expanded by less than anticipated in the first quarter, while a key measure of inflation slowed by more than initially expected.

The second estimate of U.S. gross domestic product growth in the three months to March came in at 1.3%, down from the first-time reading of 1.6% and slower than the growth of 3.4% registered in the fourth quarter of 2023.

Meanwhile, the quarterly personal consumption expenditures index was downwardly revised to 3.3% from the original mark of 3.4%. Stripping out volatile items like food and fuel, the so-called “core” PCE index was also updated to 3.6% from 3.7%, potentially relieving some concerns over the Federal Reserve’s ongoing push to corral U.S. inflation back down to its 2% target level.

Elsewhere, the pace of real consumer spending growth during the quarter was lowered to 2.0%. Advanced estimates had put the level at 2.5%.

“The main culprit for the weaker read is consumer spending,” analysts at Wells Fargo said in a note to clients. “Since the start of the Federal Reserve’s rate hikes more than two years ago, consumers have demonstrated resilience that defied the lessons of prior cycles. The lagged effect of monetary policy is long and variable. Are policymakers at the Fed finally getting through to the consumer?”

Investing.com–  The S&P 500 closed lower Thursday, pressured by a salesforce-led dent in technology and cautious sentiment ahead of key inflation data due Friday.     

At 16:00 ET (20:00 GMT), Dow Jones Industrial Average fell 330 points, or 0.9%, S&P 500 fell 0.6%, and NASDAQ Composite fell 1.1%. 

Salesforce leads tech lower

Salesforce (NYSE:CRM) fell nearly 20% to remain on track for its worst day since 2004 after reporting guidance that missed analyst estimates. The weaker results come amid a malaise in the software sector that isn’t likely to recovery in the second half of the year. 

“In our view, the malaise is broad, not Salesforce-specific, and we don’t see evidence of a 2H recovery,” UBS said in a Wednesday note after cutting its price target to $310 from $250 a share. 

Big tech also took a breather with NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc Class A (NASDAQ:GOOGL), leading to the downside, but Apple Inc (NASDAQ:AAPL) bucked the trend.

First-quarter GDP growth slows; inflation data eyed

The U.S. economy grew more slowly in the first quarter than previously estimated, as gross domestic product grew at an 1.3% annualized rate from January through March, lower than the advance estimate of 1.6% and notably slower than the 3.4% pace in the final three months of 2023.

The data came just ahead of remarks by Federal Reserve president John Williams, who pushed back against fears of a rate cut, saying the current level of monetary policy was working to restrain the economy. 

Federal Reserve policymakers have pushed back expectations for when they’ll be able to pivot to interest rate cuts, bringing Friday’s PCE price index data — the Federal Reserve’s preferred inflation gauge — firmly into focus. 

Foot Locker , but Kohl’s falters on earnings stage

Elsewhere, Foot Locker (NYSE:FL) stock rose 15% after the retailer affirmed its guidance for 2024 as its turnaround plan showed signs of progress. 

The outsized move in Footlocker’s stock was also driven by “comments that same store sales accelerated sequentially through 1Q despite the company starting to pullback on markdowns,” Evercore ISI said in a Thursday note.

Dollar General (NYSE:DG) stock fell 8% after the discount retailer posted strong first-quarter earnings, though customers spent less on average in fiscal Q1 from the same period a year earlier.

Kohl’s (NYSE:KSS) stock slipped 23% after the department store chain reported an unexpected first-quarter loss and issued a 2025 profit warning.

American Eagle Outfitters (NYSE:AEO) stock declined more than 7% after the apparel retailer’s fiscal first-quarter sales came in weaker than expected, even as revenue was 5% above the levels seen a year ago.

Energy stocks flat as oil prices drip on demand worries

Energy stocks ended just above the flatline, pressured by weakness in oil prices a larger than expected build in weekly U.S. gasoline and distillate supplies stoked fears about weaker fuel demand. 

Valero Energy Corporation (NYSE:VLO), ConocoPhillips (NYSE:COP) and Marathon Oil Corporation (NYSE:MRO) were among the biggest decliners.

(Peter Nurse, Ambar Warrick contributed to this article.)