Gold prices surged as investors processed disappointing US data on manufacturing and job openings, coupled with expectations of the Federal Reserve maintaining their rate-cut plan on hold.
According to reports, US manufacturing activity plummeted in April, with input prices skyrocketing at the fastest pace since 2022. Job openings also hit a three-year low, causing Treasury yields to rebound and boosting gold prices by up to 1.1%.
Despite these concerning indicators, the Federal Reserve is anticipated to keep interest rates unchanged for the sixth consecutive meeting, showing no signs of immediate rate cuts following higher-than-anticipated inflation. Fed officials are set to unveil their decisions at 2 p.m. in Washington, with Chair Jerome Powell scheduled to address the media shortly after.
The shift in the precious metals market was also notable, as palladium prices dipped below platinum for the first time since February. The decline was attributed to a gloomy forecast for gasoline-powered cars, impacting palladium’s premium position.
The situation was exacerbated by the shift towards replacing palladium with platinum in the automotive industry, narrowing the price disparity between the two metals. Despite this, platinum has shown resilience due to projected market deficits and the increasing demand for plug-in hybrid vehicles.
However, both palladium and platinum face uncertainty due to electric vehicles gaining popularity, which do not require catalytic converters. Automakers, who consume a significant portion of palladium, are viewed as vulnerable to this trend, resulting in a challenging long-term outlook for palladium according to experts.
Amid these dynamics, platinum saw a 1.9% increase, reaching $955.60 an ounce, while palladium experienced a 0.9% drop to $947.20 an ounce. Gold prices rose by 0.8% to $2,305.27 an ounce, with silver also registering a 0.6% climb. The Bloomberg Dollar Spot Index declined by 0.1%, reflecting the shifting market conditions.
In conclusion, the precious metals market is navigating through a complex landscape influenced by economic data, Fed decisions, and changing consumer preferences, with implications for various stakeholders in the industry.
