GOLD: Gold Set for Biggest Drop Since February

Oil prices are little changed during APAC trading today as markets wait for details on US reciprocal tariffs due to be announced at 1600 ET or 0700 AEDT Thursday. Worries regarding the impact of increased trade protectionism on global oil demand have often driven prices lower this year and so the announcement will be important for energy markets. The reaction is likely to depend on markets’ assessment of the severity of the policy. The USD is 0.1% lower.

• WTI is flat today at $71.19/bbl off the intraday high of $71.34. It has remained below initial resistance at $71.83. Brent has also traded in a narrow range and is moderately higher at $74.50 close to today’s peak of $74.62. Initial resistance is at $75.04.
• US President Trump has said that the tariffs will take effect immediately, while Treasury Secretary Bessent stated that there will be a “cap” and that countries can negotiate to reduce the tariff they face below this. There could be a tiered tariff structure along with specific reciprocal taxes depending on what the US faces in other countries, according to Bloomberg.
• Other significant uncertainties include the outlook for Russia-Ukraine. A bipartisan group of 50 US senators tabled a sanctions plan on Russia and those who buys its fossil fuels, if Russia’s President Putin doesn’t honestly negotiate a truce and then stick to it.
• Bloomberg reported that there was a US crude stock build of 6mn barrels last week, according to people familiar with the API data. Product inventories continued to decline though with gasoline down 1.6mn and distillate 11k. Official EIA data is out later today.
• Apart from the US tariff announcement, the Fed’s Kugler speaks on inflation expectations and March US ADP employment and February orders are released. The ECB’s Lagarde, Schnabel and Lane talk. 

AUD and NZD are outperforming in the first part of Wednesday trade, both pairs up around 0.35-0.40% versus the USD. Yen is down marginally versus the dollar. The USD BBDXY index is down a touch form end NY levels on Tuesday, last near 1272.4. 

• Direct catalysts for these moves aren't readily apparent. As we noted earlier, some of the new wires reports around potentially lower than 20% tariffs being considered (per WSJ) by the US administration, along with that Wednesday's announcement will present a cap for tariffs, (via CNBC) are potential risk positives.
• Still, US equity futures are off earlier highs, and in the red for the session so far. Regional Asia Pac equity markets are mostly higher, although gains aren't large at this stage and Japan and South Korea markets are still lower.  
• A tick up in US yields is also likely presenting as a yen headwind. USD/JPY was last 149.75/80.
• AUD/USD is back close to 0.6300, while NZD/USD has risen to 0.5720/25, slightly outperforming the A$.  
• NZD/JPY is tracking back towards 85.75, which is around the 20-day EMA, the 50-day is close to 86.20. AUD/JPY is last at 94.30/35, also testing 20-day EMA resistance, with the 50-day resistance point near 95.05.  

As the world awaits news on tariffs from the White House, flow data is disrupted at present due to South East Asian holidays, whilst outflows from Korea continue. 

• South Korea: Recorded outflows of -$269m yesterday, bringing the 5-day total to -$1,669m. 2025 to date flows are -$5,578m. The 5-day average is -$334m, the 20-day average is -$82m and the 100-day average of -$103m.
• Taiwan: Had inflows of +$23m yesterday, with total outflows of -$3,161m over the past 5 days. YTD flows are negative at -$18,266. The 5-day average is -$632m, the 20-day average of -$534m and the 100-day average of -$257m.
• India: Saw inflows of +$947m as of the 27th, with a total inflow of +$3,231m over the previous 5 days. YTD outflows stand at -$12,796m. The 5-day average is  +$646m, the 20-day average of -$14m and the 100-day average of -$144m.
• Indonesia: Saw inflows of $38m as of the 27th, with a total inflow of +$54m over the previous 5 days.  YTD outflows stand at -$1,830m.  The 5-day average is +$11m, the 20-day average of -$33m and the 100-day average of -$34m.
• Thailand: Recorded inflows of +$42m yesterday, totaling -$39m over the past 5 days. YTD flows are negative at -$1,130m. The 5-day average is -$8m, the 20-day average of -$27m the 100-day average of -$18m.
• Malaysia: Recorded outflows of -$87m as of 28th, totaling -$2,60m over the past 5 days. YTD flows are negative at -$2,242m. The 5-day average is -$52m, the 20-day average of -$59m the 100-day average of -$36m.
• Philippines: Saw inflows of +$4m as of 31st, with net outflows of -$26m over the past 5 days. YTD flows are negative at -$209m. The 5-day average is -$5m, the 20-day average of +$2m the 100-day average of -$7m.