Gold Prices Hover Around All-Time Peak, Oil Rises

Gold and oil prices hit new highs today as investors seem to prefer to reduce their risk amid geopolitical tensions and uncertainty regarding the Federal Reserve’s monetary policy tightening.

Gold Hits New All Time High

Gold prices climbed to a new all-time high, hitting $2,280 per ounce. Commenting on gold prices, market analysts said that tensions in the Middle East, data showing a tight labour market in the US as well as an increased number of factory orders played a role in the spike.

Economists at ANZ Bank suggested that “we remain positive on the price, but a pull-back looks likely without fresh supporting fundamentals in Q2. Our year-end price target is still $2,300.”

A Scotiabank report published on April 2nd said that “broadly, history suggests higher gold prices are usually associated with a softer tone in the USD so gold strength and a firm USD look a little odd; something may have to give.”

WTI Oil Prices Rise

West Texas Intermediate (WTI) oil prices rose to $84.85, hitting a five-month high. Supply fears due to the situation in the Middle East seem to have bolstered WTI prices. On April 2nd, the American Petroleum Institute (API) reported a larger than expected draw in U.S. inventories.

The inventory report showed crude oil shedding 2.3 million barrels, with gasoline stocks down by 1.4 million barrels and middle distillate inventories reduced by 2.5 million barrels. OPEC+ members will meet later today with market analysts expecting that they will extend production cuts for the second quarter of 2024.

ECB’s Holzmann: No In-Principle Objection To Easing in June

European Central Bank (ECB) policymaker and Governor of the Austrian National Bank Robert Holzmann said that he has no in-principle objection to reducing interest rates in June, noting that he would like to see data first and remain data dependent when it comes to his decisions.

Holzmann stressed that he doesn’t forecast any rate cut in April. His comments are taken into consideration by market analysts as he is one of the most conservative members of the ECB’s governing council. Speaking to Reuters reporters, Holzmann suggested that any rate cut by the ECB should be combined with a Fed monetary policy tightening or else the impact would be mitigated. 

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