Insights 
VT 
Gold price rose significantly, reaching $3,228 after a weekly low of $3,120, following a 1.40% gain. The rise was attributed to a weaker US Dollar due to unexpected US Producer Price Index (PPI) data, amidst declining US bond yields.
US economic data revealed the PPI in April fell by -0.5% MoM while Retail Sales slightly increased by 0.1% MoM. The Labour Department reported unchanged jobless claims at 229,000, aligning with estimates.
Market reaction to economic data
The market response saw fixed-income markets adjust, anticipating Federal Reserve interest rate cuts in 2025. Political tensions involving Russia and Ukraine also contributed to Gold’s upward movement.
Technically, Gold risks a downturn if it fails to maintain levels above $3,200. A close above $3,257 may support an upward trend, but a drop below $3,200 could test levels as low as $3,100.
Central banks remain major purchasers of gold, viewed as a safe-haven investment and a hedge against inflation. Gold’s price is influenced by geopolitical instability and movements in the US Dollar, with inverse correlations to US Treasuries and risk assets evident.
The recent surge in gold to $3,228—recovering from a dip to $3,120—followed a 1.40% gain over the week and came largely as a reaction to fresh US macroeconomic data. That data included a surprising -0.5% drop in April’s Producer Price Index (PPI), which sharply contrasted with a marginal 0.1% increase in retail sales for the same period. Weekly jobless claims remained flat, coming in at 229,000, exactly as anticipated. These figures together weakened the US Dollar and pulled bond yields lower, prompting a reassessment of interest rate expectations.
Fixed-income markets reacted swiftly. We began to see investors recalibrate expectations for rates, now largely pushing out any potential policy easing by the Federal Reserve into 2025. The lowered yields on US Treasuries, along with a softer dollar, made bullion comparatively more attractive—and that’s before factoring in external pressure from rising geopolitical tensions involving eastern Europe.
Technical perspective on gold price levels
From a technical standpoint, gold sits close to a tipping point. The $3,200 level is serving as a near-term area of interest. If the price can remain above this figure, upward momentum becomes more believable. We’re familiar with how these levels often act as self-fulfilling reference points: sustained movement above $3,257 might unlock another leg higher. On the other hand, failure to hold support just under the current spot could see a drop as far as $3,100, a well-defined zone where prior buyers stepped in.
A separate, but equally relevant, development influencing gold purchases stems from central banks. These institutions continue to stockpile the metal, reinforcing its place as a defensive asset, especially at times when confidence in fiat currency or inflation stability wavers. Their buying continues to underpin long-term support, independent of speculative flows.
The inverse ties between gold and both the US Dollar and Treasury yields should not be overlooked. When yields fall, often due to expectations of a less aggressive central bank, gold tends to benefit. Likewise, fluctuations in the greenback are essential—if the dollar sees sustained weakness, as it did following the recent PPI surprise, gold typically gains.
Political tensions, when sustained, serve as a catalyst in amplifying demand for perceived stores of value. With a more fragile geopolitical backdrop, defensive positioning could become more common. This often results in premium pricing for hedging tools that are less reliant on counterparty risk, which gold uniquely offers.
Given that the market has realigned itself around the potential timing of policy shifts and that real yields remain sensitive to short-term data points, we are entering a period where reaction to even marginal releases will likely be sharp. Each weekly update, especially those covering inflation or employment, may trigger noticeable swings in expectations and price behaviour in rate-sensitive assets.
Staying nimble and focused on key levels—both technical and macro-driven—should help navigate what could be a volatile patch. Price traction above or below defined bands is important and is likely to shape short-term positioning into the next quarter.
