Bond selloff pauses on Powell, dollar wilts

April 4 – A pause in the global bond market selloff, stabilization on Wall Street and a softer dollar should all help support Asian markets on Thursday, as investors also turn their eyes to US Treasury Secretary Janet Yellen’s visit to China.

The Asia and Pacific economic calendar on Thursday is extremely light, with only Australian and Indian services purchasing managers index reports on tap, leaving investors to take their cue from global market moves and events.

Chief among them will be Federal Reserve Chair Jerome Powell’s reiteration on Wednesday that policymakers can take their time deliberating over when to deliver their first rate cut, and that it remains “too soon” to judge whether recent stronger-than-expected inflation is “more than just a bump.”

The recent whittling away of US rate cut expectations – rates markets no longer fully expect a move in June or 75 basis points of easing in total this year – has recently begun to squeeze bond and stock markets around the world.

But Powell didn’t scare the horses any further on Wednesday. In addition, figures also showed service sector prices pressures cooled significantly last month and the dollar had its steepest fall in a month, which should help Asian stocks on Thursday claw back some of the previous day’s losses.

Yellen lands in China as evidence mounts that the economy may finally be emerging from its post-lockdown funk. The latest services PMIs strengthened that view, and Citi’s China economic surprises index is at its highest level in almost a year.

The Caixin/S&P Global services purchasing managers’ index (PMI) edged up to 52.7 in March from 52.5 the month before, above the 50-mark that separates expansion from contraction for the 15th consecutive month.

China’s tentative recovery is also supporting the continued rise in global commodity prices. Oil edged closer to USD 89 a barrel on Wednesday, copper hit a 13-month peak and gold printed yet another record high.

Gold has risen in 26 of the last 35 trading days, in which time it has surged 15%.

Investors will be wary of further aftershocks following a 7.2 magnitude earthquake that rocked Taiwan on Wednesday, the island’s biggest in 25 years. Shares in global chipmaking giant TSMC fell 0.9% after it said some facilities were evacuated following the quake, though workers have since returned.

India’s services PMI figures, meanwhile, will be closely watched to see if they match the strength of the manufacturing PMI earlier this week. Manufacturing in March expanded at the fastest pace in 16 years and hiring increased at the strongest rate in six months.

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

– Australia services PMI (March)

– India services PMI (March)

– US Treasury Secretary Janet Yellen visits China

(By Jamie McGeever; Editing by Josie Kao)

S&P 500, Nasdaq close slightly higher after soft services sector data, Fed comments

NEW YORK, April 3 – The S&P 500 and Nasdaq closed higher on Wednesday after data showing the US services industry growth slowed further in March, but the advance was limited after Federal Reserve Chair Jerome Powell indicated a cut in interest was still not in sight.

Most of the major S&P 500 sectors advanced, led by gains in energy, materials, and communication services.

Powell reaffirmed in a speech on Wednesday that the Fed will stick to its wait-and-see approach as it considers when to start cutting rates given the continued strength of the US economy and recent higher-than-expected inflation data.

Earlier on Wednesday, data from the Institute for Supply Management showed that non-manufacturing PMI declined for the second straight month to 51.4 in March, down from 52.6 in February, and weaker than analysts had expected, according to a Reuters poll.

A reading above 50 indicates growth in the services industry, which accounts for more than two-thirds of the economy, and the data still indicates the US economy continues to expand, though at a moderate pace.

“It all has to do with the Fed and market expectations for a rate cut being pushed off. I think that’s really what is weighing on the market here and has been for at least a couple of days,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

The Dow Jones Industrial Average fell 43.1 points, or 0.11%, to 39,127.14, the S&P 500 gained 5.68 points, or 0.11%, to 5,211.49 and the Nasdaq Composite added 37.01 points, or 0.23%, to 16,277.46.

The US central bank had been expected to start cutting rates as early as June, but with recent robust economic data, many in the market have been questioning the timetable.

In separate comments to CNBC on Wednesday, Atlanta Fed President Raphael Bostic said rates should likely not be reduced until the fourth quarter of this year.

“There’s this kind of yin and yang data scenario where you have some strong data that has some good-news-is-bad-news feel to it,” said James St. Aubin, chief investment officer at Sierra Investment Management in California.

Among decliners, Ulta Beauty dropped 15.3% after the beauty retailer gave a downbeat forecast at an industry conference. Shares of e.l.f. Beauty and Coty also fell.

Also, Intel shares dropped 8.2% after the chipmaker disclosed USD 7 billion in operating losses for its foundry business in 2023, steeper than the USD 5.2 billion reported the year before.

Volume on US exchanges was 11.03 billion shares, compared with the 11.76 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 1.66-to-1 ratio; on Nasdaq, a 1.25-to-1 ratio favored advancers.

The S&P 500 posted 33 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 90 new highs and 124 new lows.

(Reporting by Chibuike Oguh in New York; additional reporting by Caroline Valetkevitch in New York and by Sruthi Shankar and Shashwat Chauhan in Bengaluru; Editing by Aurora Ellis)

Gold plows to record high after Powell’s remarks

April 3 – Gold prices raced to a record high yet again on Wednesday, after Federal Reserve Chair Jerome Powell reiterated that recent readings on job gains and higher-than-expected inflation do not materially change the overall picture of economic policy this year.

Spot gold rose 0.5% to USD 2,292.31 per ounce as of 1:43 p.m. EDT (1743 GMT) after hitting a record high of USD 2,294.99 earlier in the session.

US gold futures settled 1.5% higher at USD 2,315.

“Gold surged to yet another historic high on elevated trading volume after Powell stresses that ‘bumps’ in the road don’t change the overall rosy picture,” said Tai Wong, a New York-based independent metals trader.

“Powell’s customary cautious approach doesn’t worry gold bulls…I think bulls want to see USD 2,300 and I think more ‘tourists’ are getting involved in the trade.”

Powell said that “if the economy evolves broadly as we expect,” he and his Fed colleagues largely agree that a lower policy interest rate will be appropriate “at some point this year.”

Investors still expect a first rate cut at the Fed’s June 11-12 policy meeting, even as stronger recent economic data has sown investor doubts about that outcome.

Gold, a hedge against inflation and a safe haven during times of political and economic uncertainty, has climbed over 11% so far this year, helped by strong central bank buying and safe-haven demand.

The US jobs report for March is due to be released on Friday, with new inflation data coming next week.

A pair of Federal Reserve policymakers said on Tuesday they think it would be “reasonable” to cut US interest rates three times this year.

“The likelihood of rate cuts is still there, but the data is still really strong. This is an election year, so I don’t think the Fed will want to be held accountable for any kind of market crash,” said Daniel Pavilonis, senior market strategist at RJO Futures.

Silver rose 3.1% to USD 26.92 per ounce and was trading at its highest level in over two years.

Platinum was up 1.7% at USD 931.13, and palladium gained 1.2% to USD 1,015.70.

(Reporting by Anjana Anil and Brijesh Patel in Bengaluru; Editing by Alan Barona and Ravi Prakash Kumar)

Wall Street gears up for US tax season liquidity test

NEW YORK, April 3 – Wall Street is bracing for a potential bout of stress in money markets by putting some cash on the side ahead of US tax day, when high tax-related outflows could hurt market liquidity.

Tax season, which culminates on April 15 when income tax returns are to be submitted to the US federal government, is typically associated with a drop in financial sector liquidity as individuals draw down cash from bank deposits and money market funds to pay their taxes.

Liquidity, measured by bank reserves at the Federal Reserve and the Fed’s overnight reverse repo facility (RRP) – a favored place for money market funds to park their cash – is still considered abundant, but high capital gains from booming stock markets last year could make outflows particularly sizeable this year, analysts have said, a scenario that could lead to a surge in short-term interest rates.

“It could be bumpy getting over that period,” said Joseph D’Angelo, head of PGIM Fixed Income’s money markets team. “To be defensive … you would effectively manage your maturities in such a way that you make sure you have enough liquidity in front of that date,” he said.

Having more cash available ahead of tax day could also allow fund managers to take advantage of any potential volatility, some of them said, should borrowing costs increase because of higher demand for cash.

Spencer Hakimian, CEO of Tolou Capital Management, a New York-based macro hedge fund, said he would be ready to buy short-term fixed income instruments such as Treasury bills in case of a tax-related liquidity event that would push short-term interest rates higher.

“We’d be a buyer because we think the Fed would intervene in the market,” he said.

The Fed did not immediately respond to a comment request on possible market interventions.

DISTRIBUTION

Any sign of stress will be closely monitored by investors and the Federal Reserve as it could give a sense of the availability of cash in the financial sector after nearly two years of quantitative tightening (QT) – a reversal of the massive central bank bond purchases undertaken to support markets as the coronavirus hit in 2020.

It could also give clues on how quickly the Federal Reserve will slow down its balance sheet shrinkage, a tapering process that Fed Chair Jerome Powell said last month could start soon.

In a previous round of QT in 2019, falling bank reserves led to a surge in the cost that banks and other market players pay to raise overnight loans to fund their trades, forcing the Fed to intervene by injecting liquidity into repo markets.

“There was a liquidity squeeze and the Fed basically had to completely undo all the QT they had been doing for years before that event. Now, they want to avoid that,” said John Velis, head of FX and macro strategy at BNY Mellon Markets. “I think they’re very scarred by that experience,” he said.

The flow of cash from private accounts to the Treasury could be sizeable because of stronger equity market performance in 2023 compared to 2022 and the inclusion of California after a filing extension last year, Velis said. April tax receipts last year amounted to about USD 380 billion, while this year they could go up to USD 600 billion or more, he estimated.

Tax season this year could be disruptive also because while overall liquidity remains abundant it may not be well distributed amongst banks, added Velis.

Powell highlighted the same concern last month: “there can be times when in the aggregate, reserves are ample or even abundant. But not in every part, and those parts where they’re not ample, there can be stress,” he said.

RESERVE BALANCES

Assessing the adequate level of overall reserves is also tricky.

In remarks at the end of the central bank’s rate-setting meeting last month, Powell said the balance sheet shrinkage should end when banking sector liquidity is large enough to navigate periods of stress, but he added there was no rule for what that level would be.

Wall Street’s biggest banks indicated in a recent primary dealer New York Fed survey that the expected levels of reserves needed to ensure the financial system runs smoothly, without a repeat of the 2019 liquidity squeeze, would be around USD 3.1 trillion. Reserves are now at about USD 3.5 trillion.

Because individuals are more likely to take their cash from banks rather than money market funds, bank reserve balances could decline to USD 3.1-3.3 trillion after the April 15 tax-related outflows, JPMorgan fixed income strategists led by Teresa Ho estimated in a recent note.

This would bring reserve balances within the range indicated by primary dealers as the lowest comfortable level of reserves.

“While we don’t necessarily think this will result in a funding crisis … it could shed light on how far QT can continue to run,” the JPMorgan strategists said.

(Reporting by Davide Barbuscia; editing by Megan Davies and Nick Zieminski)

Hedge funds rally in Q1, powered by gains in equities

By Carolina Mandl

NEW YORK, April 3 (Reuters) – Hedge funds capped the first quarter with gains across different strategies, as a rally in stocks, some commodities and the dollar helped the industry weather a less shiny period for bonds, investors said.

Fundamental equities long/short hedge funds were up 6.28% in the first quarter, while systematic long/short funds posted gains of 11%, according to a Goldman Sachs’ prime brokerage report that tracks hedge funds globally. Hedge funds focused on technology rose 11.3%, it added.

The S&P 500 .SPX advanced 9.09% in the quarter. Investors typically consider the hedge component that hedge funds should provide amid turmoils alongside performance at good times.

“So far it has been a very good start to the year for hedge funds,” said Ryan Lobdell, head of marketable alternatives at consultancy Meketa, adding that portfolio managers have increased exposure to rallying assets. “There has been an increase in the trendiness of equities and commodities.”

Stocks rallied in the first quarter mainly due to the outlook that interest rates have reached a peak.

The quarterly results come on top of a year of positive performance. Hedge funds posted gains of 8.12% last year, lagging far behind the 24% posted by the S&P 500.

This year, the rally has broadened beyond the so-called Magnificent Seven – Alphabet GOOGL.O, Amazon.com AMZN.O, Apple AAPL.O, Meta Platforms META.O, Microsoft MSFT.O, Nvidia NVDA.O and Tesla (TSLA.O) — to sectors such as energy, financials and industrials.

“With greater market breadth and increased dispersion, it’s generally easier to find shorts that aren’t just moving up in price along with everything else,” said Anders Hall, chief investment officer at Vanderbilt University.

Portfolio managers have also juiced up returns with an extra dose of leverage in portfolios, investors said.

Among strategies that worked: Fresh record commodities prices for copper, gold and cocoa also helped strategies such as CTAs (commodity trading advisers) and macro hedge funds, investors said. Bearish bets on European power markets and milling wheat yielded gains of 8.6% for AQR’s Heliz strategy.

Multi-strategy hedge funds, which trade multiple assets in different ways, have also had a good start.

After lagging rivals last year, Schonfeld’s flagship fund Strategic Partners ended the quarter with a 6.2% gain, a source said.

Citadel had a positive performance in all its funds strategies, with the flagship Wellington up 5.75%, according to a separate source.

Exposure to emerging markets has also paid off for some. Macro hedge fund Discovery, led by “Tiger cub” Rob Citrone, posted a 17% net gain, a source said, driven by long positions in Latin America and short bets in China.

A more tepid corner of the market for performance was fixed income, as U.S. Treasuries yields have risen on the outlook that the Federal Reserve will take longer to cut rates.

Citadel’s Global Fixed Income fund rose 2.05%, underperforming the firm’s other three funds, a source said.

“Global fixed income was particularly challenging given increasing rates,” said Hall. I’d consider a small gain to be a victory in many cases.”

Hedge fund	Performance – Q1
Schonfeld Strategic Partners	6.2%
Citadel Wellington	5.75%
Discovery	17%
Coatue	6.6%
Bridgewater Pure Alpha 18%	15.9%
Third Point Offshore	8%
Third Point Ultra	8.7%
Citadel Global Equities	6.3%
Citadel Tactical Trading	7.6%
Citadel Global Fixed Income	2.05%
Schonfeld Fundamental Equity	5.9%
AQR Helix Strategy	8.6%

(Reporting by Carolina Mandl in New York; Editing by Leslie Adler)

((carolina.mandl@thomsonreuters.com; +1 (917) 891-4931;))

Oil settles at 5-month high, gains capped by jump in US crude stocks

NEW YORK, April 3 – Oil prices settled at their highest levels since October on Wednesday on investor concerns about supply disruptions due to conflict in the Middle East, although a jump in US crude oil inventories capped the gains.

Brent futures rose 43 cents, or 0.5%, to settle at USD 89.35 a barrel, and US West Texas Intermediate futures gained 28 cents, or 0.3%, to USD 85.43 a barrel.

Both contracts were up more than a dollar earlier in the session due to growing concerns about the potential for a supply deficit during the peak summer driving season.

A meeting of top ministers from the Organization of Petroleum Exporting Countries and its allies including Russia, kept oil supply policy unchanged on Wednesday and pressed some countries to boost compliance with output cuts.

The group said some members would compensate for oversupplies in the first quarter. It also said Russia would switch to output rather than export curbs.

“If those compensation cuts get implemented, and Russia switches their export cuts to crude cuts, OPEC+ production should trend lower in the second quarter – a period when demand seasonally picks up,” UBS analyst Giovanni Staunovo said.

Also on Wednesday, Federal Reserve Chair Jerome Powell was cautious about future interest rate cuts due to recent data showing higher-than-expected job growth and inflation.

The comments were positive for oil because they indicated solid US economic growth, said Rob Haworth, senior investment strategist for US Bank’s asset management group.

In the Middle East, Iran has vowed revenge against Israel for an attack on Monday that killed high-ranking Iranian military personnel. Iran is the third-largest producer in OPEC.

Brent and WTI futures have hit five-month intraday highs for three consecutive sessions, also lifted as Ukraine’s attacks on Russian refineries cut fuel supply there.

Oil market participants are figuring out how to price in these developments and for how long, said Angie Gildea, the US national sector lead for energy, natural resources, and chemicals at KPMG.

Bank of America Global Research raised its 2024 Brent and WTI forecasts to USD 86 and USD 81 a barrel, respectively, it said in a note.

Oil’s gains were capped after the US Energy Information Administration reported US crude stocks increased by 3.2 million barrels in the week to March 29. Analysts polled by Reuters had expected a decrease of more than 1.5 million barrels, in line with data reported by the American Petroleum Institute on Tuesday.

“The EIA report went in the other direction on crude oil from what the API reported yesterday, so that has helped pause the rally a little bit,” said Bob Yawger, director of energy futures at Mizuho.

(Reporting by Shariq Khan in New York, Robert Harvey in London, Arathy Somasekhar in Houston, and Jeslyn Lerh in Singapore; Additional reporting by Natalie Grover in London; Editing by Diane Craft, Paul Simao, and Jamie Freed)

Investors hunker down as perfect storm breaks

April 3 – The perfect storm of higher bond yields, corporate jitters, and rising price pressures that hit Wall Street on Tuesday looks set to darken the Asian market landscape on Wednesday, as investors wonder whether this might be the start of a deeper correction.

Asia’s economic calendar has some top-tier releases in the shape of Chinese and Japanese service sector purchasing managers index data, but the market tone on Wednesday will probably be set by the latest tightening of global financial conditions.

The 10-year US Treasury yield hit 4.40% and Brent crude touched USD 89 a barrel on Tuesday – both the highest levels this year – and Tesla shares slumped 5% after the company announced the first fall in quarterly deliveries for nearly four years.

The three main US indexes shed 0.7% to 1.0%, and the S&P 500 clocked its biggest fall in a month. This doesn’t bode well for Asia on Wednesday, but there is a ‘glass half full’ argument to be made.

In some ways, Wall Street held up pretty well in light of the breakout in yields, back up in implied rates, and renewed talk of ‘bond vigilantes’ coming back to stalk the bond market. A decline of 1% or less, on the heels of a relentless rally culminating in last week’s record highs, is small beer.

Still, there are plenty reasons to be cautious.

The threat of currency market intervention from Japanese authorities to support the beleaguered yen refuses to lift, as the yen continues to hover close to the 152.00 per dollar level.

Recent moves in China’s currency are also worth noting. The offshore yuan is creeping above the upper limit of the 2% band around the central bank’s daily fixing rate. This comes ahead of US Treasury Secretary Janet Yellen’s return to China later this week for renewed dialogue with top officials in Beijing.

China’s ‘unofficial’ Caixin services PMI data on Wednesday rounds off a surprisingly strong set of PMI reports that has fueled hopes that the world’s second-largest economy is finally picking up momentum.

Ironically, however, this renewed optimism, together with punchy US manufacturing PMIs, has helped put upward pressure on global bond yields, which in turn has put downward pressure on stocks.

World markets may be back in a ‘good news is bad news’ mindset.

Alibaba shareholders may be asking themselves a similar question after the Chinese e-commerce giant said on Tuesday it conducted a USD 4.8 billion share buyback in the three months to March, its second-biggest quarterly buyback ever.

Hong Kong-listed shares rose 1%, but US-listed shares fell 0.7%.

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

– China Caixin services PMI (March)

– Japan services PMI (March)

– Hong Kong retail sales (February)

(By Jamie McGeever; Editing by Josie Kao)

Indexes end lower as Tesla drops, rate cut timing weighed

NEW YORK, April 2 – US stocks fell on Tuesday as investors weighed chances that the Federal Reserve could delay cutting interest rates, while Tesla shares dropped after the electric car maker posted fewer quarterly deliveries for the first time in nearly four years.

Tesla was among the biggest drags on the S&P 500 and Nasdaq.

Adding to caution, US Treasury 10-year yields rose to their highest since late November.

Recent solid US economic reports have raised doubts about whether the Fed could deliver the three rate cuts outlined in its latest forecast.

“The narrative of ‘higher for longer’ is coming back into play despite the fact that the Fed does see a rate cut sometime this year. So this has got the market worried,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

According to preliminary data, the S&P 500 lost 37.73 points, or 0.72%, to end at 5,206.04 points, while the Nasdaq Composite lost 156.38 points, or 0.95%, to 16,240.45. The Dow Jones Industrial Average fell 387.81 points, or 1.00%, to 39,171.55.

Data on Tuesday showed new orders for US-manufactured goods rebounded more than expected in February, while US job openings held steady at higher levels.

The market has pared back expectations for rate cuts to about two this year, from three a few weeks ago, according to LSEG’s rate probability app.

Fed officials who spoke on Tuesday reiterated that the US central bank is in no rush to cut rates.

San Francisco Fed President Mary Daly cited a “real risk” of cutting rates too soon and locking in too-high inflation.

Also, Fed Bank of Cleveland President Loretta Mester said on Tuesday she continues to expect the central bank will be able to cut rates this year and noted the June policy meeting might be when the easing kicks off if economic data allows it.

Investors are eagerly awaiting Friday’s US non-farm payrolls data.

Healthcare shares were among the day’s weakest performers. UnitedHealth, CVS Health and Humana fell as the US government kept reimbursement rates for providers of Medicare Advantage health plans unchanged, in a setback for insurers.

The CBOE Volatility index, Wall Street’s fear gauge, rose.

Among other decliners, Calvin Klein-parent PVH Corp’s shares tumbled after the retailer forecast a roughly 11% drop in first-quarter revenue.

(Reporting by Caroline Valetkevitch; Additional reporting by Sruthi Shankar and Shashwat Chauhan in Bengaluru; Editing by Shinjini Ganguli and Richard Chang)

Dollar dips while jawboning supports yen

NEW YORK, April 2 – The US dollar was down on Tuesday after earlier hitting its highest in almost five months, following a new report that showed US job openings held steady at higher levels in February.

The Japanese yen was last up at 151.605 per dollar, after earlier dipping to 151.79. It has traded in a tight range since reaching a 34-year trough of 151.975 on Wednesday, which spurred Japan to step up warnings of intervention.

The dollar index rose to 105.1 on Tuesday, its highest level since Nov. 14, adding to sharp gains on Monday after US data unexpectedly showed the first expansion in manufacturing since September 2022, causing traders to pare rate bets.

The dollar index last stood at 104.81, down 0.181% after a report from the Labor Department showed that job openings edged up to 8.756 million on the last day of February, slightly higher than expectations, as traders also digested a February increase in factor orders.

The Commerce Department’s Census Bureau on Tuesday said new orders for US-manufactured goods rebounded more than expected in February, boosted by demand for machinery and commercial aircraft as manufacturing regains its footing.

Monday’s US ISM manufacturing survey data featured a sharp rise in a measure of prices in the sector, adding to investors’ concerns that inflation will be slow to fall back to 2%, delaying the Federal Reserve’s first rate cut.

“Really the dollar over the last nine months or so has been driven by Fed policy expectations — when the probability of a cut increases sooner, the dollar tends to weaken, and vice versa,” said John Velis, Americas macro strategist at BNY Mellon.

Fed Chair Jerome Powell on Friday said the central bank was in no hurry to lower borrowing costs after data showed a key measure of inflation rose slightly in February.

On Tuesday, Japanese Finance Minister Shunichi Suzuki reiterated that he would not rule out any options to respond to disorderly currency moves.

Japanese authorities intervened in 2022 when the yen slid toward a 32-year low of 152 to the dollar.

The yen’s decline has come despite the Bank of Japan’s first interest rate hike since 2007 last month, with officials cautious about further tightening amid a fragile exit from decades of deflation.

“The fact that they didn’t intervene last week to me suggests that it’s going to take a break above 152 for Japanese policymakers to start getting involved, and in retrospect, I think maybe that’s prudent of them because intervention loses its significance each time you enter the market,” said Matt Weller, head of market research at StoneX.

Still, officials are “wary of backing themselves into a corner by drawing a line in the sand at 152,” said Nicholas Chia, Asia macro strategist at Standard Chartered.

“The rationale of jawboning and intervening in FX markets is mainly to buy time for the JPY in the hopes that USD strength wanes and recedes,” he said.

Elsewhere, China’s yuan fell to a 4-1/2-month low as a strong dollar offset the selling of the US currency by state-owned banks. The yuan fell to a low of 7.2364 per dollar on the day, its weakest level since mid-November.

The euro fell to its lowest since mid-February at the end of the Asian session but was last up at USD 1.0763. Data on Tuesday showed that the eurozone factory downturn deepened again in March.

Sterling ticked up from near its lowest since December to USD 1.2569 after data showed its manufacturing sector brightened last month.

Bitcoin declined 5.36% to USD 66,027 after earlier declining to as low as USD 64,550.

The Swiss franc hit its lowest since the start of November at 0.909 to the dollar. It has dropped around 2.5% since the Swiss National Bank unexpectedly cut interest rates on March 21.

(Reporting by Hannah Lang in New York; additional reporting by Harry Robertson in London, Kevin Buckland in Tokyo, and Ankur Banerjee. Editing by Sam Holmes, Lincoln Feast, Ed Osmond, and William Maclean)

Gold shatters new records as Mideast tensions add to bullish mix

April 2 – Gold scaled yet another record peak on Tuesday as traders snapped up the safe haven asset amid growing Middle East tensions, largely ignoring a stronger dollar and tempered bets for US rate cuts.

Spot gold was up 0.8% at USD 2,268.44 per ounce by 2:07 p.m. EDT (1807 GMT), after hitting an all-time high of USD 2,276.89.

US gold futures settled 1.1% higher at USD 2,281.8.

“We’re seeing some safe-haven demand flowing into gold, which relates to the Israeli strikes on Iran’s embassy in Syria,” said Daniel Ghali, commodity strategist at TD Securities.

The latest leg up in gold prices is probably also associated with short covering from family offices and proprietary trading shops, Ghali added.

Iran vowed to take revenge on Israel for an airstrike on the Iranian embassy compound in Damascus.

Saxo Bank’s Ole Hansen said an underlying bid from retail and central banks was being joined by momentum-following speculators who have extended their already elevated longs following gold’s break above USD 2,200.

The mix of bullish tailwinds has driven bullion nearly 10% higher so far this year.

“What makes the gold rally so unusual is that it is occurring despite significant traditional headwinds with the US dollar rising, Treasury yields rising, the likelihood of higher for longer US rates increasing,” said independent analyst Ross Norman.

The dollar jumped after Monday’s data showed US manufacturing grew for the first time in 1-1/2 years in March.

Traders pared bets of a June interest rate cut to 58% versus around 60% before the data, which under normal circumstances, would pressure zero-yield bullion.

But while the gold market remains in a “highly bullish mood”, it probably needs to consolidate amid a shift back to a more hawkish view of Federal Reserve policy, said Tai Wong, a New York-based independent metals trader.

Silver rose 3.2% to USD 25.89 per ounce, platinum added 2.4% to USD 923.00 and palladium climbed 0.1% to USD 996.88.

(Reporting by Anjana Anil and Brijesh Patel in Bengaluru and Polina Devitt in London; Editing by Emelia Sithole-Matarise and Vijay Kishore)

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