Gold hit a new record high yesterday, finally leaving the consolidation range it had stuck to for most of the past month. The precious metal closed at $2,558 an ounce on Thursday after gaining almost $50 on the day. The move appears to have maintained some momentum this morning in Asia, reaching as high as $2,570 at one point.
US economic data over the past couple of days fell close enough to expectations to not spook markets, and most importantly not giving the Federal Reserve any reason to deviate from their stated course. CPI data was a mixed bag overall; year-on-year inflation fell to 2.5%, marginally edging ahead of expectations; core inflation however came in slightly above consensus. The following day, jobless claims brought no surprises. Odds for next week’s interest rate decision continue to fluctuate, slightly favouring the smaller 25 basis point cut at the time of writing. There are now very few hurdles between now and next week’s decision.
In a widely telegraphed move, the European Central Bank lowered rates on the Euro yesterday, slashing a quarter percent off the deposit facility rate. The refinancing rate – the rate at which the ECB lends to banks – underwent a much larger 60 basis point haircut. The decision fuelled a rise in the Euro against the Dollar, with the DXY falling half a percent.
Oil prices finally received some leniency after hurricane Francine forced producers to evacuate rigs in the Gulf of Mexico. Remains to be seen whether the rebound will have any lasting strength or if long-term forecasts will continue to weigh on crude prices.
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