Gold
COMEX Gold futures snapped a seventh weekly
gain and slightly eased during the previous week, to close at $2,015.8 per troy
ounce, reversing earlier gains, as investors expect Fed to hike rates by
another 25 bps in the May FOMC meeting. Despite the ease in US headline CPI, the
core CPI remains sticky, and ticked higher to 5.6% in March 2023, from a
14-month low of 5.5% in February, bolstering the claims that there is more work
to be done. US retail sales contracted more than expected in March, although
upward revisions for the prior month softened worries about low consumer
activity. At the same time, strong corporate results from US banks downplayed
systemic risks from the bank runs in March, giving the Fed more room to
increase interest rates. According to the CME FedWatch tool, markets are now
expecting an 83.8% chance of a 25 bps hike in May. US 10-year treasury yields are
hovering at a two-week high of 3.51%. Indian retail buying might be supported
by the upcoming Akshaya Tritiya, though prices are hovering near record highs.
Crude
WTI Crude oil futures saw the fourth straight
weekly gain, rising 2.26% in the previous week and closing at $82.52 per bbl
after IEA warned of a price rise and US plans to refill strategic reserves.
China’s inflation data released recently showed that consumer inflation touched
an 18-month low, amid subdued demand, suggesting an uneven economic recovery,
spurring expectations that Beijing could make further efforts to boost growth.
China’s crude oil imports in March surged 22.5% from a year earlier to the highest
since June 2020, data showed on Thursday, as refiners stepped up runs to
capture fuel export demand and in anticipation of domestic economic recovery.
Chinese GDP growth, retail sales, and industrial production figures to be
released tomorrow will be closely watched. With tightening supplies and rising
prospects of a Fed pivot, markets might shrug off recession concerns in the
near term, and oil prices might stay buoyed.