Investors are betting that interest rates have probably peaked or are near their peak in the current tightening cycle, which led gold to stabilize around $1,980 an ounce on Friday and indicates it will rise further. 8% in March.
The main drivers of such expectations were the reduction in global inflationary pressures and the efforts of the main central banks to avoid a more serious banking crisis. Demand for safe-haven assets such as gold was boosted this month by recent banking turmoil triggered by the bankruptcy of two regional US lenders.
At its March meeting, the US Federal Reserve announced a widely anticipated 25 basis point rate hike and hinted at only one additional rate hike.
According to money markets, the central bank is forecasting a 40% chance of pausing rate hikes in May, with a rate cut expected by the end of the year.
Traders are now anticipating basic US PCE data for clues on upcoming Fed activities and statements from various Fed members.
Steel and gold break the trend
The first quarter saw a drop in commodities, with the energy industry leading the way. Natural gas prices hit their lowest point in more than two years and lost more than half of their value.
According to Albert Chu, a portfolio manager at Newton Investment Management, the belief that the Federal Reserve will lower interest rates soon has replaced the fear that they will stay high for longer. Fears of bank contagion also began to dampen demand, leading growth sectors like technology to gain a “bid at the price of ‘value’ assets.”
Analysts anticipated that the S&P GSCI, which serves as a benchmark for investments in the world of commodities, would fall almost 7% during the first quarter through March 28.
Future Nickel Demand Looks Promising With The Shift To Renewables
This year’s declines include some industrial metals, with nickel prices on the London Metal Exchange spot market falling more than 20% in the first three months. Due to the fact that the nickel trade was not prohibited and the metal continued to reach consumers in China and other countries despite the conflict in Ukraine, experts speculate that the metal may have been less damaged than many once thought. principle. Russia is a major producer of nickel.
But the US Inflation Reduction Act and its equivalent in Europe, which aim to reduce household spending and increase sustainable energy use, will essentially “begin to metalize the world in a significant way.” The move to renewable energy depends on the use of nickel and other metals.
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