SMM News: in the middle of trading in the US market on Monday, when trading was relatively calm, spot palladium gold once again staged a "flash crash", falling more than $100 in the short term, hitting as low as $1359.92 an ounce. In terms of economic data, the Fed's favorite inflation indicator, the core PCE price index, was flat in March, below expectations. The dollar index fell below the 98 mark, while spot gold traded below the $1280 / oz level.
The PCE price index fell to 1.6% in March, slightly below market expectations of 1.7%, but personal consumption rose 0.9% over the same period, the highest in nine and a half years, according to data released today. As the Fed's most concerned indicator of inflation, the weak performance of the PCE has led investors to expect the Fed's interest rate decision this week to remain cautious so far this year.
According to the latest data released by the US Bureau of Economic Analysis on the day, the monthly rate of the PCE price index, which is the most important inflation indicator for the Federal Reserve in March (excluding food and energy prices), remained virtually unchanged, recording a monthly rate of 0.0%, below the expected 0.1%. That left core PCE at an annualised rate of 1.6 per cent in March, the smallest increase in 14 months and below expectations of 1.7 per cent.
The monthly rate of the US PCE price index was 0.2 per cent in March, higher than the previous value of-0.1 per cent, but still below expectations of 0.3 per cent.
At the same time, however, personal spending recorded a monthly rate of 0.9 per cent in March, better than expected at 0.7 per cent, well ahead of the previous 0.1 per cent performance and the biggest monthly increase since 2009, giving dollar bulls the pride of continuing to stand out from the crowd.
Meanwhile, personal income rose 0.1 per cent in March from a month earlier, below expectations, with 0.2 per cent recorded in February.
Benefiting from rising consumption of cars and health care, US personal spending rose sharply in March, while consumer spending rose to a nine-and-a-half-year high, but inflationary pressures remained low, agency comments said. The Fed's focus on the annual rate of increase in the core PCE price index is the lowest since January 2018.
Another subsequent figure was much worse than expected: the Dallas Fed business activity index stood at 2 in April, up from 8.3% and expected to be 10%.
In US trading, the US dollar index hovered around the 98 mark and is now trading slightly below the 98 level, fluctuating within a narrow range of less than 20:00 in the day.
The dollar lagged on Monday as strong US economic data did little to boost the dollar or convince investors that the slowdown in economic activity was over.
The dollar traded within a narrow range as Japan began a week-long holiday, which is usually a period of weak liquidity, although it could trigger a surge in volatility.
Fed policy meetings, Brexit talks and a series of global data, including employment data, are likely to be the trigger for sharp currency fluctuations this week.
Everyone is watching the Fed to see what its policy makers think of the first quarter GDP report, which showed strong economic growth of 3.2 per cent, but mainly due to one-off reasons such as a surge in inventories.
"We will not significantly increase our foreign exchange positions this week in an attempt to profit from the market impact of one or more economic events," said Stephen Gallo, head of European foreign exchange strategy at BMO Capital Markets in London.
"nevertheless, our strong preference for the dollar is to buy when the dollar falls against most other currencies of the G10."
The total dollar long position climbed to $33.6 billion on Monday, the highest level since December 2015, according to the bank's weekly CFTC confidence report. The euro still holds the largest net short position.
Gold falls make a comeback Palladium "flies down" $100
Gold prices fell on Monday from more than a week high hit the previous day as strong data from China and the US boosted stocks and made gold less attractive.
In early morning trading, spot gold fell below the $1280 / oz mark, hitting as low as $1277.91 / oz in the day.
Palladium fell particularly sharply, falling more than $100. below the $1400 / oz mark, hitting as low as $1359.92 / oz.
The main contract for NYMEX palladium futures is as low as $1355.90 an ounce, and futures prices are now trading at $1350 an ounce.
Global stock markets rose, supported by data showing profits at Chinese industrial companies rose for the first time in four months, as well as strong first-quarter growth figures released in the US last week.
"this has been a risk-friendly market for a long time and the stock market has been rising. Gold prices are also below the very important later level of $1300, which is putting pressure on the market, "said Eugen Weinberg, an analyst at Commerzbank.
The recent stock market rally has led investors to reduce their holdings of gold, with holdings of SPDR Gold Trust, the world's largest gold listed trading fund, falling to 746.69 tons on Friday, the lowest level since Oct. 19.
China's holdings of US Treasuries have fallen by more than 3 per cent since the start of the month.
The Commodity Futures Trading Commission (CFTC) (CFTC) said Friday that speculators' short bets on COMEX gold also increased in the week ended April 23.
"still, gold is in a very uncertain period. On the one hand, the environment is ready for greater pressure on gold prices, but when we broke through $1280 two weeks ago, the decline quickly receded, "said Craig Erlam, senior market analyst at OANDA.
Gold rose to a high of $1288.59 an ounce on Friday, its highest level since April 16, and recorded its biggest weekly percentage increase in five weeks.
The dollar rose last weekend, but weakened slightly on the back of GDP data. The overall figures are strong and much better than expected, but the basic figures are less impressive, "Erlam said.
The US GDP data raised questions about the country's real economic strength, as quarterly growth figures were largely driven by temporary factors such as a small trade deficit and the largest accumulation of unsold goods since 2015.
Investors are now looking forward to the Fed's policy meeting and a series of global economic data this week, including non-farm payrolls.