GOLD: Gold Steadies After US CPI

Friday night saw some consolidation as the NZD finally took a breather after its relentless march higher. The NZD had a range of 0.5754 - 0.5840 on Friday night, Asia opens bid, last near 0.5835/40, pressing the year's highs towards 0.5853.

• The big news from late on Friday was President Trump's tariff exemptions on smartphones, computers and other electronics, though this has been downplayed over the weekend as a procedural step and they will be looking at the whole electronic supply chain as part of a national security tariff probe.
• The USD was sold heavily over the course of last week as positions built over the last 15 years due to US exceptionalism are starting to be unwound. These positions are significant and could take a while to be pared back.
• Technically the NZD held the pivotal 0.5500 area and is now being dragged higher by a collapse in the USD. 
• The CFTC data shows both leverage funds and Asset managers are running historically large short positions. NZD is a favourite short in times of distress so these positions are being challenged. The data shows Asset managers in particular have been active in reducing those shorts.
• On the day the market will be watching the pivotal 0.5850 area as we start the week, a break would trigger another leg higher back towards 0.6000. Expect dips back towards 0.5700/50 to now find support.
• Data : The PMI for the services sector rose to 49.1 from 49.0 in March. Card spending for March was softer thouhg at -1.5%m/m for total. Net migration edged up to +5430, from +2370 in Jan. 

Fig 1: NZD CFTC Positioning

Source: CFTC/MNI - Market News/Bloomberg 

• Despite a drop of nearly -2.00% on Monday, Gold ascended new heights for the remainder of the week breaking new records.
• Finishing +6.5% higher for the week, in a strong year for gold, this was the best week so far.
• Gold finished the week at US$3,237.61, a new high.
• With Monday’s sell off, gold traded below the 20-day EMA of $3,078.84 but with the rally for the remainder of the week, sits well clear above all moving averages.
• Inflows into gold ETFs hit 226.5tn in Q1 2025,  the highest level since early 2022, according to data from the World Gold Council, with over 50% of that coming from the US.  

• Over the weekend, China reported new loans data which pointed to positive signs for the domestic economy.
• China’s January-February New Yuan loans were  CNY9.78tn versus an estimate of CNY9.14tn following prior period of CNY6.138tn.
• Aggregate financing was also strong up CNY15.18tn, from CNY9.292.1tn February.
• A stronger than expected lending to businesses coupled with very strong government bond issuance  suggests that things are moving forward in an economy challenged by the weight of a downturn in property.
• The authorities have been clear in their intent of supporting the economy, as evidenced by the weight of government bond issuance.
• The PBOC’s deputy governor Xuan's speech while meeting with Japan and South Korean bank leaders last week, indicated China’s intent is to implement moderately loose monetary policy.
• What that is likely to look like could be a modest cut to the financing rate for 7-day reverse repurchase agreements via the open market operations and an expected cut the reserve requirement ratio (RRR) this quarter