GOLD: Gold Fails To Hold Above US$3,400

The NZD/USD had a range of 0.5976 - 0.6014 in the Asia-Pac session, going into the London open trading around 0.6000, +0.03%. The pair was muted after the RBNZ left the benchmark rate unchanged, it initially tested higher but when the RBNZ said it had considered a cut the NZD dropped quickly in response. If there is a deeper correction in risk and the USD can squeeze higher then the risk to the NZD is a move back towards the 0.5850/0.5900 area, the bulls will be hoping the support just below 0.6000 continues to hold.

• RBNZ On Hold, Considered Cutting Rates By 25bps, Awaiting More Information : As widely expected, the RBNZ held the policy rate steady at 3.25%. This was in line with the sell-side consensus (although some forecasters saw risks of a 25bps cut), while market pricing only gave a very small chance to a cut today.
• The RBNZ considered two options at this meeting, to cut by 25bps or hold policy steady. The case to ease largely reflected concerns around faltering economic momentum. The case to hold won out, amid high uncertainty: The RBNZ noted: "Some members emphasized that waiting would allow the Committee to assess whether weakness in the domestic economy persists, and how inflation and inflation expectations evolve."
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6075(NZD519m). Upcoming Close Strikes : 0.6000(NZD407m July 10), 0.6025(NZD373m July10).
• CFTC Data shows Asset Managers have reduced their newly built longs in NZD +8515, the Leveraged community reduced their short last week -8424.
• AUD/NZD range for the session has been 1.0868 - 1.0900, currently trading 1.0895. The cross has broken out of its recent range and focus will now turn to the more pivotal 1.0900/50 area.

Fig 1: NZD/USD Spot Hourly Chart

Source: MNI - Market News/Bloomberg Finance L.P

NZGBs closed 1-5bps cheaper, with a steeper curve, after the RBNZ left the cash rate unchanged at 3.25%. The decision was widely expected, with only 4bps of easing priced by the market. 

• (RBNZ) "Annual consumers price inflation will likely increase towards the top of the Monetary Policy Committee's 1 to 3 percent target band over mid-2025. However, with spare productive capacity in the economy and declining domestic inflation pressures, headline inflation is expected to remain in the band and return to around 2 percent by early 2026."
• The RBNZ considered two options at this meeting: to cut by 25bps or hold policy steady. The case to ease largely reflected concerns around faltering economic momentum. The case to hold won out, amid high uncertainty: The RBNZ noted: "Some members emphasised that waiting would allow the Committee to assess whether weakness in the domestic economy persists, and how inflation and inflation expectations evolve."
• Swap rates are 2-6bps higher on the day, flat to 4bps higher after the decision.
• RBNZ dated OIS pricing closed showing a cumulative 33bps of easing by November 2025.
• Tomorrow, the local calendar will see Net Migration data alongside the NZ Treasury's planned sale of NZ$250mn of the 3.00% Apr-29 bond and NZ$200mn of the 4.50% May-35 bond.

• After strong falls overnight, Gold has steadied in the Asia trading day modestly lower.  
• Gold opened the day at US$3,302.51 and is down -0.20% at $3,295.36.
• Last night's falls saw gold trend below major moving averages and today's weakness sees gold below the 50-day EMA of $3,299.39.

source: Bloomberg Finance LP / MNI 

• Below is the 100-day EMA of $3,191.92.  
• Brazil's exchange B3 SA is launching a new gold futures contract that will begin trading on July 21 amid a more than 25% year-to-date increase in the commodity that led it to a record high on April.