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Gold Soars 1.50%, hits 9-month highs

Safehaven gold soared to a 9-month high as investors’ concerns around US data pointing at a recession and the US debt ceiling started to take their toll.

Chart: Gold

Key Factors for today:

• Gold at 9-month high despite hawkish Fed comments


• EIA confirmation not convincing markets


• BOE and ECB sound more hawkish


• BOJ continues YCC undeterred

Gold Breaks Higher Amidst Debt Ceiling Drama

The price of gold soared to a 9-month high of $1935/oz on some modest safe haven flows in the wake of an official notification that the US had reached its debt ceiling and a broadly weaker dollar. The DXY fell 0.35% on Thursday despite Fed Vice-Chain Brainard’s comments that rate hikes would need to continue rising to a sufficiently restrictive level. Markets seem to weigh heightening concerns of a hard landing as risk negative following poor retail sales and PPI data.

DOE Confirms API Build, but WTI Soars 2.15%

DOE inventories aligned with API reports on Wednesday, also showing growing stocks in crude and gasoline. WTI slid lower below $80/bbl initially, but prices reversed swiftly, supported by comments from IEA’s head at Davos and JODI data from November. IEA’s head said that oil markets might be tighter than expected this year, whereas the JODI data showed that oil demand had hit the highest level in 9 months. $82.35/bbl is the next resistance.

BOE Optimistic About Policy Effects

BOE’s Governor Andrew Bailey reiterated that there wasn’t a specific rate being targeted as a peak and said that domestic inflation would drop sharply. Cable has been on the rise due to recent optimism and a weaker dollar, closing Thursday 0.39% higher but still unable to break past $1.2450, but also slide through $1.23. Meanwhile, UK GfK consumer confidence came in lower than expected.

ECB More Hawkish Than It Communicated

The main takeaway from the minutes from the last ECB meeting was that a large number of members wanted a 75bps hike instead of the 50bps that was ultimately agreed to. Members also saw a stronger Euro helping to reduce inflation, whereas others wanted more QT. Euro ended the session as high as the pound, primarily on the back of a soft greenback, ending Thursday 0.39% higher but still in range.

Japan Inflation Increased As Expected

Both headline and core CPI inflation in Japan ticked up to 4.0%, in line with expectations. The BOJ once again offered to buy an unlimited amount of bonds to defend YCC range. The Japanese Finance Ministry raised its yield assumption for 2026 to 1.6% from 1.1% prior in the context of the BOJ potentially moving off of its extraordinary easing. USD/JPY traded 0.33% up, with 130.00 a major resistance and 127.50 a critical support.

On the docket

• UK Retail Sales


• ECB Lagarde Speech


• Canadian Retail Sales


• Fed Hardker and Waller Speech


• US Home Sales

FX 1-day relative performance (USD)

• Yen still worst performer against USD, 0.57% lower


• Pound and Swissy down 0.15% vs greenback


• Kiwi and Aussie 0.31% and 0.23% higher


• Loonie and euro nearly unchanged


• Silver 1.13% up, but gold only 0.29% higher


• Crude and brent 0.50% and 0.45% higher


• Gas falls by 3.66%

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