GOLD: Tracking Lower For 2nd Straight Session, But Still Well Above Key Support
Gold made lows just under $3316 in the first part of trade, where liquidity was lighter amid strong USD gains. We stabilized since then but found selling interest above $3386. We last racked near $3340, still off 1.20% for the session.
- Gold has been moving in lock step with USD weakness recently, so it no surprise that we have corrected lower for bullion as USD sentiment has stabilized. Trump remarks, particularly around having no intention to fire Fed Chair Powell, has aided USD sentiment, but we sit off earlier highs though for the BBDXY index (last under 1224).
- Gold is still in a technical bullish uptrend though. Focus will be on re-testing $3500 on the upside. Initial firm support lies at $3163.5, the 20-day EMA.
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GOLD: Gold Trending Lower on Profit Taking.
* Last week gold finally broke through US$3,000 for the first time in what for many analysts was earlier than expected.
* Gold began Monday at $3,022.15 and has trended lower for most of the session to be at $3,017.72.
* Up almost 16% year to date, gold has been one asset class that has benefitted from the factors driving global markets namely tariff risks, Federal Reserve policy uncertainty and inflation.
* Globally analysts have been adjusting their forecasts for gold for 2025 with some now predicting US$3,500 before year end.
AUSSIE BONDS: Subdued Session Ahead of Federal Budget Tomorrow & CPI (Wed)
ACGBs (YM flat & XM -1.0) are little changed on a data light session.
- Cash US tsys are 2-3bps cheaper across benchmarks in today's Asia-Pac session after Friday's uneventful end to the trading week. Monday's US focus will be on S&P flash PMIs alongside more Fed speakers including Atlanta Fed Bostic on Bbg TV and Fed Gov Barr on small business lending late in the afternoon.
- Cash ACGBs are 1bp richer to 1bp cheaper with the 3/10 curve steeper and the AU-US 10-year yield differential at +13bps.
- The swap curve has bull-steepened, with rates flat to 2bps lower.
- The bills strip is flat to +3, with a flattening bias.
- RBA-dated OIS pricing is flat to 2bps softer across meetings today. A 25bp rate cut in April is given a 4% probability, with a cumulative 68bps of easing priced by year-end (based on an effective cash rate of 4.09%).
- Tomorrow will see the Federal Budget, with an election likely to be called soon after. It is expected to show deficits across the forecast horizon with additional expenditure likely in an attempt to win votes.
- The key data item for the week is Wednesday's February CPI data.
CHINA: Bond Futures Do Little as the PBOC Withdraws Liquidity.
- A large liquidity withdrawal via this morning’s OMO did little to move the bond market with Bond Futures marginally lower.
- China’s 10YR future is lower by -0.01 at 107.45.
- The 10YR remains below all major moving averages with the nearest being the 200-day EMA at 107.55.
- China’s 2YR future is lower by -0.03 at 102.33.
- The 2YR future remains below all major moving averages with the nearest being the converged 200-day and 50-day EMA at 102.60.
- China’s 10YR government bond begins the week at 1.845%
- Data ahead for the week include Medium Term Lending Facilities (no change expected to interest rate) and industrial profits.
