Oil rebounds, gains 1% after US crude draw, lukewarm inflation data

NEW YORK – Oil prices rose nearly 1% on Wednesday from a two-month low in the prior session as the market balanced bullish US economic and crude storage data against the International Energy Agency’s (IEA) forecast for weaker global oil demand growth.

Brent futures rose 37 cents, or 0.5%, to settle at USD 82.75 a barrel, while US West Texas Intermediate crude (WTI) gained 61 cents, or 0.8%, to end at USD 78.63.

That cut the premium of Brent over WTI to its lowest since March 28. A narrower premium makes it less profitable for energy companies to send vessels to the US to pick up crude cargo for export.

Earlier in the session, the bearish IEA report helped push both benchmarks into technically oversold territory with prices at their lowest since February. On Tuesday, both benchmarks closed at their lowest since March 12.

Prices reversed direction after US data showed a bigger-than-expected crude drawdown and lukewarm inflation that fueled expectations of a cut in interest rates later this year.

US crude inventories last week fell 2.5 million barrels, the Energy Information Administration (EIA) said, much more than the 500,000-barrel draw forecast in a Reuters poll.

“The crude oil draw is mostly from the increase in the refinery utilization rate … Refiners finally got serious about that, finally cranked it up a bit,” Bob Yawger, director of energy futures at Mizuho told Reuters.

US consumer prices increased less than expected in April, suggesting that inflation resumed its downward trend at the start of the second quarter in a boost to financial market expectations the US Federal Reserve (Fed) will cut interest rates in September.

Lower interest rates would reduce borrowing costs for businesses and consumers and could spur economic growth and demand for oil.

With the Fed expected to cut interest rates later this year, the US dollar fell to a five-week low against a basket of other currencies. A weaker dollar can boost demand as the greenback-denominated commodity becomes less expensive to buy in other currencies.

The IEA trimmed its forecast for 2024 oil demand growth, widening the gap with producer group OPEC in terms of expectations for this year’s global demand outlook.

The Organization of the Petroleum Exporting Countries and its allies like Russia, a group known as OPEC+, is likely to hold its June 1 oil policy meeting online, four OPEC+ sources said, rather than in Vienna as currently scheduled.

In Canada, meanwhile, favorable winds are expected to push a major wildfire away from the oil sands city of Fort McMurray, officials said, less than a day after 6,000 people were ordered to leave.

Fort McMurray is the hub for Canada’s oil sands output. A huge wildfire in 2016 forced the evacuation of 90,000 residents and shut in more than 1 million barrels per day of output.

(Reporting by Scott DiSavino in New York and Noah Browning in London; Additional reporting by Laila Kearney in New York, Katya Golubkova in Tokyo, and Emily Chow in Singapore; Editing by Marguerita Choy and Bill Berkrot)

Dollar swoons after data suggests rate cut in September

NEW YORK – The dollar slumped against major currencies on Wednesday after US consumer prices in April showed inflation had resumed trending lower in the second quarter, raising hopes the Federal Reserve can deliver an interest rate cut as early as September.

Also boosting optimism that the Fed was closer to a rate cut was a reading of US retail sales that was unexpectedly flat last month, as higher gasoline prices pulled spending away from other goods in a sign the consumer was retrenching a bit.

After inflation proved “sticky” in the first quarter, with housing rental rates and other prices remaining stubbornly high, the market welcomed the CPI data. But slowing retail sales provided the real news for the market.

“You go to see the lead actor in the movie, but the supporting actor steals the show and it’s retail sales, which is really driving the price action today across the board,” said Roosevelt Bowman, senior investment strategist at Bernstein Private Wealth Management in New York.

The Australian dollar and other currencies known as high-beta because of their volatility performed well, he said.

“Some of the higher-beta currencies that have been under pressure this year, that have been favorite sell positions against the dollar, they’re doing quite well today,” he said.

However, Bowman said the day’s data wouldn’t change the Fed’s outlook on near-term inflation but led the market to buy duration in the form of Treasuries and to sell the dollar.

The Australian dollar gained 0.97% to 0.6687, while the Mexican peso rose 0.81% to 16.6971 per dollar.

Futures traders priced in a higher probability of rate cuts, with 24 basis points seen for when the Fed meets in September, and almost 51 bps of cuts by December, according to LSEG data.

The dollar index, which measures the greenback against a basket of major currencies including the yen and the euro, fell to a fresh one-month low at 104.30, and was last 0.66% lower at 104.35.

One of the dollar’s biggest declines was against the yen as it weakened 0.96% to 154.94. The drop would likely keep at bay currency intervention by the Bank of Japan and Japanese other authorities, said Marvin Loh, senior global macro strategist at State Street in Boston.

“The BOJ is going to like the dollar-yen at 155 again,” he said. “The fast money was definitely willing to push the dollar again higher after the intervention.”

The dollar’s surge to a 34-year peak of 160.245 yen on April 29 triggered two rounds of aggressive yen buying that traders and analysts suspect was the work of the BOJ and Japan’s Finance Ministry.

The consumer price index rose 0.3% last month after advancing 0.4% in March and February, the Labor Department’s Bureau of Labor Statistics said. In the 12 months through April, the CPI increased 3.4% after climbing 3.5% in March.

Economists polled by Reuters had forecast the CPI gaining 0.4% on the month and advancing 3.4% year-on-year.

The unchanged reading in retail sales last month followed a slightly downwardly revised 0.6% increase in March, the Commerce Department’s Census Bureau said on Wednesday. Retail sales were previously reported to have risen 0.7% in March.

Fed Chair Jerome Powell gave a bullish assessment on Tuesday of where the US economy stands, with an outlook for continued above-trend growth and confidence in falling inflation that, while eroded by recent data, remains largely intact.

In other major currencies, the euro rose 0.52% to USD 1.0877 and sterling rose 0.69% to 1.2675.

The dollar dropped 1.3% to 10.6729 versus the Norwegian krone after hitting 10.6671,its lowest level since April 10, with analysts saying the gap between US and Norwegian rates might have peaked.

(Reporting by Herbert Lash, Editing by Louise Heavens and Jonathan Oatis)

As CPI risk clears … it’s lift off!

It’s ‘green for go’ in Asia on Thursday as stock markets around the world roar to fresh highs, boosted by renewed optimism that the Federal Reserve will soon start cutting US interest rates following benign inflation figures on Wednesday.

The most notable exception is China, where the threat of outright deflation continues to loom large over the economy and depress risk appetite, while the yen’s rebound on Wednesday could halt the Japanese equity revival in its tracks.

Otherwise, the market mood could barely be more positive. Stocks are on fire, bond yields are sliding to the lowest levels in months, the dollar is retreating and appetite for riskier investments like emerging market assets is strong.

While one data point does not a trend make, investors have latched onto the US inflation report for April as evidence the Fed can start cutting rates soon – July is back in play and 50 basis points of cuts this year is now fully priced.

Economists at UBS highlighted one particularly interesting nugget from the data – April marked the 16th time in 18 months when the non-seasonally adjusted core CPI one-month change was below the change 12 months prior. Maybe a trend is in place?

That’s the bullish backdrop for investors in Asia who also have several key local events to navigate on Thursday, including first-quarter Japanese GDP, Australian unemployment, and a monetary policy decision from the Philippines.

First-quarter GDP data from Japan are expected to show Asia’s second-largest economy contracted an annualized 1.5% in the January-March period, signaling a quarterly decline of 0.4%, according to a Reuters poll.

All key drivers of growth are expected to have gone into reverse in the quarter, not a particularly conducive environment for further rate hikes from the Bank of Japan.

But that’s exactly what markets are expecting – 25 bps of tightening is now in the 2024 money market curve, bond yields are rising and the 10-year US-Japan yield spread on Wednesday shrank to less than 340 bps, the narrowest since March.

The yen rallied 1% on Wednesday. Excluding April 29 and May 1, the two days of suspected yen-buying Japanese intervention, it was the currency’s best day this year.

Chinese assets are struggling more, mirroring the wider gloom hanging over the economy and the difficult choices policymakers face in lifting it. Sentiment will have been dampened further by Washington’s new tariffs on some imports from China.

It’s a big day for Chinese company news on Thursday, with heavyweights Baidu and JD.Com both reporting first-quarter earnings.

In the Philippines, meanwhile, the central bank is expected to keep its key policy rate unchanged at 6.50%, and not lower it until the final quarter of this year, according to a Reuters poll.

Here are key developments that could provide more direction to markets on Thursday:

– Japan GDP (Q1)

– Australia unemployment (April)

– Philippines central bank decision

(Reporting by Jamie McGeever; Editing by Josie Kao)

Oil settles lower as inflation data gives way to market jitters

HOUSTON – Oil prices settled lower on Tuesday, after US data stoked concerns that interest rates may stay high, but potential risks to supply from Mideast tensions and wildfires in Canada put a floor under prices.

Brent crude futures settled down 98 cents, or 1.18% at USD 82.38 a barrel. US West Texas Intermediate crude futures (WTI) settled down USD 1.10, or 1.39% at USD 78.02 a barrel.

US producer prices increased more than expected in April, feeding fears the Federal Reserve may keep borrowing costs elevated to fight inflation.

Fed Chair Jerome Powell said he expects US inflation to keep declining through 2024 but warned he is less confident now, since prices rose more quickly than expected through the first quarter.

“The inflation story is not under control that is pulling demand back a bit and the thing that rubbed a little salt in the wound was Powell’s comments”, said Tim Snyder, economist at Matador Economics.

US consumer price data is expected on Wednesday and will affect timing of rate cuts that could spur economic growth and oil demand.

Another stronger-than-expected inflation reading could feed worries that a too-hot economy will force the Fed to raise rates again, which could hinder growth.

Meanwhile on Tuesday, the Organization of the Petroleum Exporting Countries stuck to its forecast for relatively strong growth in global oil demand in 2024 and said there was a chance the world economy could do better than expected this year.

OPEC’s monthly report said world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025.

Energy markets were also watching wildfires in remote western Canada that could buoy prices by disrupting oil supplies.

Firefighters on Monday were racing to contain one blaze in British Columbia and two in Alberta near the heart of the country’s oil sands industry.

Canada has a 3.3 million barrel per day (bpd) production capacity, and is a key supplier of heavier crude.

“Spreading wildfires in Alberta oil sands impose downside risks to our constructive Canada production outlook as massive fires in the same region eight years ago triggered a temporary shutdown of over 1 million bpd oil production,” said Goldman Sachs analysts in a note.

Meanwhile, conflict in the Middle East could be lending a floor to prices. Israeli tanks pushed deeper into eastern Rafah, reaching some residential districts of the southern border city where more than a million people had been sheltering.

“Uncertainty over Rafah and the blowback from that is keeping the market on edge as well,” said Phil Flynn, an analyst at Price Futures Group.

US crude oil and gasoline inventories fell last week while distillate stocks rose, according to market sources citing American Petroleum Institute figures on Tuesday. Official inventory data from the US government is due on Wednesday.

The API figures showed crude stocks were down by 3.104 million barrels in the week ended May 10, the sources said on condition of anonymity. Gasoline inventories fell by 1.269 million barrels, and distillates rose by 673,000 barrels.

Brent crude futures edged down 62 cents, or 0.74% to USD 82.74 a barrel by 1640 ET shortly after API data was published, and US West Texas Intermediate crude futures (WTI) fell by 68 cents, or 0.86% to USD 78.44 a barrel.

(Reporting by Georgina McCartney in Houston; Paul Carsten and Natalie Grover in London and Jeslyn Lerh in Singapore; Additional reporting by Colleen Howe in Beijing; Editing by Marguerita Choy, Alexandra Hudson, Ros Russell, and David Gregorio)

Dollar slips after unexpected rise in US producer prices

NEW YORK/LONDON – The dollar eased on Tuesday after an unexpected increase in US producer prices in April amid strong gains in the costs of goods and services, indicating inflation remained stubbornly high early in the second quarter.

The report from the Labor Department also showed wholesale goods prices rising solidly last month, though the cost of food declined. Traders trimmed their expectations for the Federal Reserve to cut interest rates in September after the report.

The dollar index, a measure of the US currency against six major peers, slid 0.02% to 104.99, right in the middle of 103 to 107 in what Brad Bechtel, global head of FX at Jefferies in New York, called its range for the year.

“It’s pressing kind of neutral, almost as if people have cleaned up their positioning and are kind of flat going into tomorrow,” he said, referring to the release on Wednesday of the consumer price index (CPI) for April.

“In terms of things like carry trades, those are still very much well positioned,” Bechtel said. “Aussie-yen, Mexican-yen, and even the dollar versus the yen to some extent, risk appetite is still there.”

The Australian dollar-yen cross rate rose to the second-highest this year, outside of a more than 10-year high of 104.95 touched on April 29. It was last up 0.36% at 103.59. The euro rose 0.28% to 1.0820.

The producer price index for final demand rose 0.5% in April after falling by a downwardly revised 0.1% in March, the Labor Department’s Bureau of Labor Statistics said.

Economists polled by Reuters had forecast that PPI, which can be volatile, would gain 0.3% after a 0.2% rise in March. In the 12 months through April, the PPI increased 2.2% as expected after climbing 1.8% in March.

CPI data may provide more insight into how fast the Fed might cut interest rates. But one data print is unlikely to persuade policymakers that the pace of inflation is slowing enough to permit a rate cut in the near term, said Thierry Wizman, global FX and rates strategist at Macquarie in New York.

The Fed may not cut at all this year and if it does, it may “cut once and it’ll be late in the year,” he said, adding that a real downward move in rent inflation may change his mind.

YEN WATCHED

Wednesday’s report on core consumer prices is expected to show CPI rose 0.3% month-on-month in April, down from a 0.4% growth the prior month, according to a Reuters poll.

Speaking in Amsterdam, Powell’s comments largely restated those made at his press conference after the Fed’s last meeting.

Money markets have dialed back their expectations of Fed rate cuts to about 44 basis points of easing this year, according to LSEG data.

Earlier in Europe, sterling fell sharply before paring losses after Bank of England Chief Economist Huw Pill said it was not unreasonable to believe that over summer there might be enough confidence to consider rate cuts.

Sterling rose 0.25% to 1.2591 after falling to USD 1.2510 following Pill’s remarks.

Traders are also closely watching the yen, down to May 1 levels, which then saw suspected interventions by Japanese authorities. It was last 0.12% lower at 156.425 per dollar.

Japan’s Ministry of Finance is suspected to have intervened in the currency market at the end of April through early May after the yen hit a 34-year low of 160.245 on April 29.

But the market remains bearish on the currency given the massive gap between Japan’s ultra-low yields and those in other major economies.

The Chinese offshore yuan was trading near a two-week low after US President Joe Biden unveiled a bundle of steep tariff increases on an array of Chinese imports, including electric vehicles, computer chips and medical products.

The offshore yuan was last flat on the day at 7.240, after falling earlier in the day to its lowest level since May 5.

(Reporting by Herbert Lash; Additional reporting by Joice Alves in London and Ankur Banerjee in Singapore; Editing by Marguerita Choy, Andrew Heavens, and Alison Williams)

World stock index set for record high, dollar dips after PPI, Powell

NEW YORK – MSCI’s gauge of stocks across the globe was set for a record high close on Tuesday, while the US dollar edged lower as investors digested US producer prices data and comments from Federal Reserve Chair Jerome Powell.

Major US stock indexes also climbed, with the Nasdaq posting a closing all-time high.

Data showed US producer prices rose more than expected in April amid strong gains in the costs of services and goods, indicating that inflation remained elevated early in the second quarter.

Powell, speaking at a banking event in Amsterdam, said the latest report on US producer prices was more “mixed” than “hot” given that prior data was revised lower even as the figures for April came in higher than expected.

The key data of the week, though, will be Wednesday’s US consumer prices report.

Investors have been watching inflation data closely as they weigh how soon the Fed might lower interest rates.

Higher-than-anticipated consumer prices in the first quarter of the year raised concerns that the Fed will be unable to cut rates this year unless there is a significant uptick in the unemployment rate.

The Dow Jones Industrial Average rose 126.60 points, or 0.32%, to 39,558.11, and the S&P 500 gained 25.26 points, or 0.48%, to 5,246.68. The Nasdaq Composite gained 122.94 points, or 0.75%, to 16,511.18, surpassing its prior peak set on April 1.

MSCI’s gauge of stocks across the globe rose 3.07 points, or 0.39%, to 785.90, and earlier hit an intraday record. The STOXX 600 index rose 0.15%.

The dollar edged lower following the PPI data.

“Sticky inflation looked downright stuck this morning after a much hotter-than-expected inflation reading. But with last month’s numbers revised lower, this report may not have been as much of an upside shock as it first appeared to be,” said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.17% to 105.01, with the euro up 0.26% at USD 1.0816.

Against the Japanese yen, the dollar strengthened 0.16% to 156.45.

Benchmark 10-year Treasury yields briefly hit an 11-day high after the PPI data and then they retraced.

The yield on benchmark US 10-year notes fell 3.2 basis points to 4.449%, from 4.481% late on Monday.

US President Joe Biden on Tuesday unveiled a bundle of steep tariff increases on an array of Chinese imports including electric vehicles, computer chips and medical products.

The announcement came after market close in China, but US-listed shares of Chinese EV makers including Li Auto were down 2.2%.

Brent crude futures fell 98 cents, or 1.18%, to settle at USD 82.38 a barrel. US West Texas Intermediate crude futures (WTI) fell USD 1.10, or 1.39%, to settle at USD 78.02 a barrel.

Spot gold added 0.89% to USD 2,356.95 an ounce.

(Additional reporting by Bansari Mayur Kamdar and Shristi Achar A in Bengaluru, and Alun John and Tom Westbrook; Editing by Marguerita Choy and Mark Potter)

Yields fall as traders wait on consumer inflation report

Treasury yields fell on Tuesday ahead of a highly anticipated consumer price inflation report on Wednesday that analysts say is likely to drive near-term Federal Reserve policy.

Higher-than-expected consumer prices in the first quarter of the year raised concerns that the Fed will be unable to cut interest rates this year unless there is a significant uptick in the unemployment rate.

Fed Chair Jerome Powell said on Tuesday he expects US inflation to continue declining through 2024 as it did last year, though his confidence in that has fallen due to the first quarter data.

Higher-than-anticipated consumer prices on Wednesday will likely drive yields higher, but a softer report could also spark a large bond market rally, especially in light of market positioning.

“The markets are a little primed for a higher release, that seems to be what the hedges are all betting against,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

Economists polled by Reuters expect the closely watched core CPI to rise by 0.3% in the month, down from 0.4% in March, for an annual gain of 3.6%, down from 3.8%.

Weaker-than-expected jobs growth in April led investors to raise bets for two 25-basis-point cuts this year, but the trajectory of inflation will be key to whether that occurs. Traders are now pricing in 45 basis points of cuts this year, down from around 46 basis points on Monday.

Benchmark 10-year yields jumped to an 11-day high earlier on Tuesday after data showed that producer prices rose more than expected in April.

Producer prices showed strong gains in the costs of services and goods. The producer price index (PPI) for final demand rose 0.5% last month after falling by a downwardly revised 0.1% in March.

LeBas said the producer price inflation report doesn’t mean that Wednesday’s consumer price index (CPI) will be higher than anticipated, noting that “historically surprises in the PPI are uncorrelated with surprises in the CPI.”

It also follows a cool reading in March, which when added together leaves the index close to its recent trends. “It looks like we’ve got some month-to-month chop rather than anything meaningful,” LeBas said.

Benchmark 10-year note yields were last down 4 basis points on the day at 4.445%, after reaching 4.534% in the aftermath of the data, the highest since May 3.

Two-year yields fell 4 basis points to 4.819%, after going as high as 4.899%, the highest since May 2.

The inversion in the yield curve between two-year and 10-year notes was little changed on the day at minus 38 basis points.

(Reporting by Karen Brettell; Editing by Franklin Paul and Jonathan Oatis)

Markets buoyant, but wary of CPI, tariffs

Asian markets should open in an upbeat mood on Wednesday as lower US bond yields and a weaker dollar reflect expectations that the Fed will cut interest rates as early as September, but the apparent serenity could be shattered in a flash.

The most obvious flash point is April’s US inflation report after Asia closes on Wednesday – punchier-than-expected figures will force investors to rethink their Fed outlook, lifting the dollar and yields, and weighing on risk appetite.

Tuesday’s US producer price inflation report was, to quote Fed Chair Jerome Powell himself, “mixed” – price growth in April was hotter than expected, but prior data were revised down.

Investors maintained a ‘glass half full’ stance though – equities rose, the dollar, yields, and volatility drifted lower, and appetite for risky assets picked up.

There’s nothing immediately obvious on the Asian economic calendar that might rock the boat on Wednesday – Australian wage growth data, Thai consumer confidence, and Indonesian trade figures are the main indicators on tap.

The corporate calendar may generate a bit more trading activity in individual stocks, especially in Japan, where financial giants Mitsubishi UFJ, Mizuho, and Sumitomo are all due to report full-year 2024 earnings.

Markets in China, meanwhile, may not react all that positively to the new tariffs on USD 18 billion of Chinese imports confirmed by the Biden administration on Tuesday.

China’s commerce ministry said the move will “seriously affect the atmosphere of bilateral cooperation” and Italian Economy Minister Giancarlo Giorgetti said the G7 will discuss the risk of fragmenting global trade next week.

China will almost certainly respond in kind, it just remains to be seen how forcefully.

“Given the high stakes involved, this round of tariffs could ratchet up the trade tensions between the two countries in a way that is difficult to pull back from,” said Eswar Prasad, trade policy professor at Cornell University and former IMF China department head.

Chinese stocks have plateaued this week after mixed earnings, at best, from Alibaba and Tencent, and selling pressure on the yuan is increasing again – dollar/yuan’s daily fixing rate has risen five days out of the last six.

The dollar is also gaining ground on the Japanese yen, even though 10-year Japanese bond yields are marching to their highest level since November while US yields slip. The yen’s fragility is bound to put traders on high intervention alert.

Here are key developments that could provide more direction to markets on Wednesday:

– Australia wage growth (Q1)

– Indonesia trade (April)

– Japanese financials earnings

(Reporting and Writing by Jamie McGeever)

Oil prices settle up on demand optimism, US inflation in focus

NEW YORK – Oil prices rose on Monday, as signs of improving demand in the US and China, the top two oil consumers, aided the bounce from the previous session’s USD 1 a barrel slide.

US West Texas Intermediate crude futures rose 86 cents, or 1.1%, to settle at USD 79.12 a barrel. Brent crude futures gained 57 cents, or 0.7%, to settle at USD 83.36 a barrel.

Prices drew support from expectations of strong US gasoline demand, as motorist group AAA forecast this year’s Memorial Day travel activity will be the highest since 2005, with road trips at a record since 2000.

US crude oil stockpiles likely declined last week, according to a preliminary Reuters poll of analysts. Declining stocks are typically a sign of improving demand.

Chinese data at the weekend showed consumer prices rising for a third straight month in April while producer prices extended declines, signaling improved domestic demand. The country also plans to raise 1 trillion yuan (USD 138.26 billion) for economic stimulus.

On the supply front, investors are watching for potential oil supply disruptions in Western Canada due to wildfires the country’s government has warned could be “catastrophic”.

“Canadian oil sands production currently has a 3.3 million barrel daily capacity, which is very likely to be affected moving into the summer,” said Alex Hodes, an analyst at energy brokerage StoneX.

Oil prices have also found support from enduring expectations that OPEC+, the Organization of the Petroleum Exporting Countries and its allies, will extend supply cuts into the second half.

No. 2 OPEC producer Iraq is committed to oil production cuts agreed by the group, its oil minister told the state news agency on Sunday. Those comments followed his suggestion on Saturday that Iraq would not agree to any additional cuts proposed by the wider group at its meeting on June 1.

Traders said they are more cautious about the Middle East as hopes have been dashed for a ceasefire in Gaza. Israel on Sunday pushed back into North Gaza, while the death toll in Israel’s military operation has passed 35,000 Palestinians, according to Gaza’s health ministry.

Investors will watch the US Consumer Price Index data due on Wednesday for clues to when the Federal Reserve will consider cutting interest rates, Hodes said.

Analysts expect the US central bank to keep its policy rate on hold for longer, supporting the dollar and making dollar-denominated oil more expensive for buyers holding other currencies.

(USD 1 = 7.2325 Chinese yuan renminbi)

(Reporting by Shariq Khan in New York, Natalie Grover in London and Florence Tan in Singapore; Editing by David Goodman and David Gregorio)

Gold dips as traders await US inflation data for Fed rate cut cues

Gold prices fell 1% on Monday on profit-taking, as investors looked forward to key inflation figures this week for clues on the US interest rate cuts this year.

Spot gold fell 1% to USD 2,336.76 per ounce by 1745 GMT. It had hit its highest level since April 22 on Friday.

US gold futures settled 1.3% lower at USD 2,343.

“This could be some people exiting the gold market prior to some of these risk events such as (Fed chief) Jerome Powell speaking, PPI and CPI all coming out this week,” said Phillip Streible, chief market strategist at Blue Line Futures.

“Gold bulls are rightfully concerned that the Federal Reserve needs weaker inflation data, not just weaker employment figures, to justify cutting rates,” said Tai Wong, a New York-based independent metals trader.

The yellow metal had risen more than 1% last week, following weak jobs data, supporting bets of a US rate cut this year.

A stronger majority of economists polled by Reuters expect the Fed to cut its key interest rate twice this year, starting in September.

Traders are now pricing in about a 63% chance of a rate cut in September, according to the CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding non-yielding gold.

Markets focus this week will be on the US Producer Price Index (PPI) data on Tuesday, followed by the Consumer Price Index (CPI) data due on Wednesday.

Among other precious metals, spot silver gained 0.3% to USD 28.23 per ounce, while palladium fell 1.7% to USD 961.50.

Platinum rose above the key level of USD 1,000 per ounce to a near one-year high. It was up 0.6% at USD 1,000.55 per ounce.

However, consultancy Metals Focus expects average prices for platinum and palladium to fall this year compared with 2023 despite another year of structural deficit.

BHP Group, the world’s largest listed miner, said Anglo American has rejected a revised buyout offer valuing the company at 34 billion pounds (USD 42.67 billion).

(Reporting by Rahul Paswan and Brijesh Patel in Bengaluru; Editing by Shilpi Majumdar, Shailesh Kuber, and Alan Barona)

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