US inflation once again beat expectations, causing markets to further discount the chances of an easing cycle starting in June.

The dollar responded with a 1% rise against a basket of major currencies, taking the DXY back to 104.80. The dollar recorded two peaks near these levels in February and late March, and it has not traded steadily higher since November.

The general and core consumer price indexes each added 0.4% versus 0.3% expected. The annual rate of general inflation rose to 3.5%, while the core index maintained its 3.8% y/y pace. In both cases, the monthly rates of increase defy expectations of a return to the targeted 2%.

This should be troubling news on top of the strong employment report late last week. The data-linked Fed is unlikely to miss the data set of the past five days and is likely to maintain its wait-and-see stance.

Technically, the current upside momentum looks like an attempt to break away from support in the form of the 50 and 200-day moving average crossover and head higher after a prolonged consolidation. This movement may not meet any significant resistance until the 106.80-107 area, where the downward reversal was formed last October.

In the broader currency landscape, Dollar’s ascent positions it as the current market leader, followed by Yen. New Zealand Dollar, despite an initial boost from a hawkish RBNZ, slid to one of the second weakest position, just ahead of Australian Dollar. Canadian Dollar remains in limbo, with markets awaiting BoC’s rate decision, while Sterling slightly outperforms other European majors like the Euro and Swiss Franc.

Technically, one focus for the US session is whether DOW would dive through 38483.25 near term support, and close below there. If realized, that would indicate that DOW is at least in a correction to the rally from 32327.20, and target 38.2% retracement of 32327.20 to 39899.05 at 37000.42 next.

Gold price rebounds due to increasing geopolitical tensions and physical Gold buying by global central banks.

Investors expect that the Fed will keep interest rates at current levels until the third quarter of this year.

US core PPI grew strongly by 2.4% from estimates of 2.3% and the prior reading reading of 2.0%.

Gold price (XAU/USD) moves higher after falling to $2,330 in Thursday’s early New York session. The precious metal rebounds as safe-haven demand counters waned Fed rate cut prospects.

Traders have priced out strong speculation that the Federal Reserve (Fed) will pivot to rate cuts in the June meeting. Investors pare Fed rate cut bets drastically after the United States Consumer Price Index (CPI) report for March showed that core price pressures rose more than expected for straight three months.

Generally, higher bond yields increase the opportunity cost of holding investments in non-yielding assets such as Gold. Gold price is breaking fresh all-time highs at $2,365. Climbing even beyond $2,372. However, the near-term demand for Gold is still intact due to heightened geopolitical risks. Fears of direct involvement of Iran in the Israel-Hamas war in Gaza have increased as the Israeli army is planning to invade Rafah, where most of the displaced Palestinians are refuged. Just keep buying Gold as 1st resistance is $2,395. So keep buying Gold !!!

STRATEGY

BUY GOLD 2343 exit 2377

SELL GOLD 2390 exit 2338

BUY GBPUSD 12488 exit 12588

SELL GBPUSD 12590 exit 12509

BUY USDJPY 15265 exit 15345

SELL USDJPY 15344 exit 15266

KEEP BUYING GOLD ON ALL KINDS OF FALLS AS SENTIMENT IS STILL VERY BULLISH.

Prepared by: Mr.SAM KIMA, Senior Vice President