Why Is Gold Still Rising? Central-Bank Buying.
It was a golden week for gold. Stocks, Treasuries, and
sold off, but
rose 3.9% on the week, hitting a record $2,342.30 per troy ounce. “Gold continues to defy gravity,” wrote XM analyst Achilleas Georgolopoulos. “It is showing unprecedented strength and manages to rally under every market scenario.”
Prices marched higher in recent weeks amid expectations that the Federal Reserve will soon cut rates, putting pressure on bond yields and the dollar, which typically benefits gold. But gold kept rising even as inflationary signs put rate-cut bets under doubt. “Gold has rallied even on dollar-positive days,” wrote Georgolopoulos. “This is another indication that other forces are in play, such as strong buying appetite from certain sovereigns trying to diversify their dollar holdings.”
“Support has come from a few segments where demand has held up particularly well,” wrote
“This has perhaps been most visible in China, where the PBOC [People’s Bank of China] has been increasing its exposure.” Added Gavekal Dragonomics, “A larger portion of China’s household savings is flowing into gold as an alternative.”
But, noted
analyst Kathleen Brooks, “warning signs are flashing.” Open interest on gold contracts may have peaked, she said, and the price is 15% above its 200-day simple moving average. Still, if gold flags, there’s always silver, which is up some 10% in the past month to gold’s 9%.
Write to Jack Denton at jack.denton@barrons.com
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Last Week
Markets
Gold set another record, and oil hit $90 a barrel. Treasuries surged on positive manufacturing data, sending stocks and Bitcoin lower. Federal Reserve chief Powell clung to his cuts-this-year message, but then March jobs numbers came in over 300,000, above expectations. On the week, the
fell 2.3%; the
1%; and the
0.8%.
Companies
Walt Disney
’s
Robert Iger easily prevailed in a proxy contest with Trian Partners. An activist wants
BlackRock
’s
Larry Fink to split his CEO and chairman roles.
stock fell sharply after the company reported its first year-over-year decline in deliveries since 2020. Fidelity cut the value of its 5.7% stake in X, formerly Twitter, now 73% below its initial valuation.
said it was buying back up to $2 billion in shares. Blackstone Real Estate Income Trust failed to cover its dividend for the first time.
Trump Media & Technology Group
fell over 34% for the week after an earnings release showed $58 million in losses. Former President Trump posted a $175 million bond to appeal his New York state civil fraud conviction.
Deals
Payments processor
agreed to a $6.3 billion buyout from Advent…Ari Emanuel’s talent agency,
agreed to a $13 billion buyout by Silver Lake…Oil-services leader
is buying
in a $7.8 billion all-stock deal…
entered merger talks with Skydance Media after rejecting Apollo Global’s $26 billion offer.
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Write to Robert Teitelman at bob.teitelman@dowjones.com
Next Week
Wednesday 4/10
The Bureau of Labor Statistics releases the consumer price index for March. Consensus estimate is for a 3.4% year-over-year increase, two-tenths of a percentage point more than in February. The core CPI, which excludes volatile food and energy prices, is expected to rise 3.7%, a tenth of a percentage point less than previously. CPI data have come in hotter than expected so far this year and, along with continued strength in the labor market, have caused bond yields to hit new highs for the year.
The Federal Open Market Committee releases the minutes from its mid-March monetary-policy meeting. At the meeting, the FOMC kept the federal-funds rate unchanged at 5.25% to 5.50%.
Thursday 4/11
The European Central Bank announces its monetary-policy decision. The ECB is widely expected to keep its key short-term interest rate unchanged at 4%. The ECB’s next policy move will probably be a rate cut, with traders eyeing the June meeting.
Friday 4/12
First-quarter earnings season begins in earnest with the big banks announcing results.
and
all report before the opening bell.
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Email: editors@barrons.com
