Gold Rallies as Investors Prepare for Inflation Data

Metals

Precious metals prices rallied significantly yesterday, continuing Friday's show as investors brace themselves for inflation data later this week. The growing concerns over rising inflation with the Federal Reserve considering it as transitory supported the flow into the inflationary hedge. The US yields suffered further, where the 10-year yields fell to 1.55%, the lowest in two weeks. The price of a gold ounce touched $1903 high, before easing a little, the price of a silver ounce surrendered partial gains falling to $27.70 after trading as high as $27.97, and palladium held steady near $2826.

USD

The dollar index which measures the US dollar performance to a basket of the world's major currencies inched higher to 90.17, staying in yesterday's range, as investors look for fundamental drivers. The US Consumer Price Index will be a live event for the market, as soaring figures could increase inflation concerns. Moreover, the Federal Reserve is kicking off a two-day policy meeting next week, where such data could be a massive given to assess the status of the economy. The EURUSD dropped to $1.2164, the GBPUSD fell to $1.4130, and the USDCAD rallied to 1.2094.

Equities

Major US stock index futures were little changed yesterday as investors await fundamental drivers. The market rallied significantly post the jobs report on Friday, which suggested a possible extension to the current policy or at least a postponed tightening, as the US economy created fewer jobs than expected. Market participants are looking for additional economic indicators such as the consumer price index to have a better assessment of the outlook and the Fed's policy path. Meanwhile, Biogen stocks shot higher after the FDA approved its Alzheimer's drug. The Dow Jones Industrial Average futures traded near 34580, the S&P500 futures held steady near 4225, and Nasdaq futures hovered above 13800 for the first time in more than a month.

Oil

Oil prices retreated from their interim highs as market participants await the nuclear deal negotiations. The world superpowers and Iran will hold the fifth round of negotiations on the 10th of June, where a positive outcome, would drive further oil supplies to the recovering market. Top oil producers were trying to be conservatives with their output additions to protect the price recovery. However, additional significant supply from Iran could spark tensions about market share, which eventually could weigh on prices. The West Texas Intermediate crude July contract dipped to $68.48, and the Brent blend August contract fell to $70.69.

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