Should the ECB deliver a hawkish message, investor sentiment will deteriorate again and could push gold prices above $1,980
Wall Street rallied to end higher on Wednesday, as investors digested hot inflation data and mixed quarterly results. The producer price index increased 1.4% in March, the largest gain on record. On a yearly basis, the PPI jumped 11.2% after advancing 10.3% in February. In individual stocks, Delta reported strong revenue during its first quarter and solid bookings. The company’s stocks rose 4.7% after the report. The Dow Jones Industrial Average rose 1.01%, the S&P 500 gained 1.12%, and the Nasdaq Composite rallied 2.03%.
Asian equities were mostly higher on Thursday as risk sentiment continued to improve, with MSCI’s broadest index of Asia-Pacific shares outside Japan adding 0.43%. In The S&P/ASX 200 rose 0.59% despite Australia’s unemployment rate remained at 4% in March versus 3.9% expected. China’s Shanghai Composite added 1.22% as the country’s authorities hinted at further supportive measures. bucking the trend, South Korea’s Kospi finished unchanged after the Bank of Korea announced a 25-basis-points hike in its base rate to 1.5%.
As risk sentiment improved, the USD index fell back below the 100.00 figure to settle around 99.60 on Thursday, with US Treasury yields losing ground as well. As such, EURUSD plunged to the 1.0810 area before turning positive on the day. The euro extended the pullback early on Thursday to get back above 1.0900 ahead of the ECB meeting. The pair could extend recovery later in the day if the central bank delivers a hawkish tone when speaking about the outlook for its monetary policy.
Elsewhere, gold prices have settled marginally below one-month highs registered around $1,981 as safe-haven demand has waned. Still, the XAUUSD pair refrains from a deeper retreat, staying well above the 20-DMA, suggesting the bullion could regain the upside momentum after some consolidation. Should the ECB deliver a hawkish message, investor sentiment will deteriorate again and could push gold prices above $1,980.