S&P 500 Hits Record High Amid Fed Speech Anticipation; Gold Struggles Below $2,200 as Investors Await Policy Clues | Daily Market Analysis

Key events:

• UK - GDP (QoQ) (Q4)
• UK - GDP (YoY) (Q4)
• USA - GDP (QoQ) (Q4)
• USA - Initial Jobless Claims
• USA - Chicago PMI (Mar)

Wednesday saw the S&P 500 achieving a new record closing high, supported by a decline in Treasury yields in anticipation of a speech by Federal Reserve governor Christopher Waller later in the day, which investors hoped would provide insights on inflation trends.

The S&P 500 closed at a fresh peak of 5,250.96, marking a 0.4% gain, while the NASDAQ Composite rose by 0.1% and the Dow Jones Industrial Average surged by 477 points, or 0.7%.

Investors observed a decline in Treasury yields as they awaited remarks from Fed governor Waller. However, some analysts cautioned that Waller's comments might adopt a hawkish tone to temper overly dovish expectations regarding the Fed's stance.

The Gold price struggles to extend its weekly gains attained over the past three days, hovering within a narrow trading range below the $2,200 threshold during Thursday's Asian session. Traders exhibit reluctance, opting to await further guidance regarding the Federal Reserve's monetary policy stance before committing to fresh market directions, resulting in subdued price movements.

Consequently, attention remains fixed on Friday's release of the US Personal Consumption Expenditures  Price Index, anticipated to drive demand for the US Dollar and potentially provide significant momentum to the precious metal.

Overnight, hawkish comments from Federal Reserve Governor Christopher Waller tempered hopes of rate cuts, potentially limiting upward momentum for the non-yielding Gold price. Despite signaling a less restrictive policy trajectory, the Fed hinted at maintaining its course to reduce interest rates by 75 basis points in 2024, hindering aggressive bullish bets on the USD. Furthermore, a generally softer sentiment in equity markets serves as a supportive factor for the safe-haven XAU/USD, restraining substantial corrective declines.

Meanwhile, the Japanese Yen struggles to capitalize on a modest rebound against its US counterpart, though it remains marginally lower during Thursday's Asian session. The cautious approach of the Bank of Japan and uncertainties surrounding future rate hikes continue to undermine the JPY.

Amid speculation of potential intervention by Japanese authorities to support the domestic currency and a generally cautious risk environment, downward pressure on the safe-haven JPY is constrained.

Meanwhile, the Australian Dollar exhibits a partial recovery from intraday losses but continues to trade in negative territory on Thursday. Persistent challenges confront the AUD/USD pair, stemming from softer Consumer Inflation Expectations and Retail Sales figures from Australia. These factors elevate anticipation of potential interest rate cuts by the Reserve Bank of Australia in the latter part of 2024. Furthermore, Wednesday's release of subdued Australian Monthly Consumer Price Index data reinforces this narrative.

In March, Australian consumer confidence in future inflation moderated slightly to 4.3%, down from a recent uptick to 4.5%. Meanwhile, February's adjusted Retail Sales figures saw a modest 0.3% month-on-month increase, falling short of both forecasts and the prior month's robust 1.1% growth. Moreover, the release of Australia's February Monthly Consumer Price Index (YoY) revealed a steady 3.4% rise, although slightly below the anticipated 3.5%.

In the Asian session on Thursday, the USD/CAD pair attracted some buyers, temporarily breaking a three-day losing streak, but failed to sustain significant momentum. Prices remained below the 1.3600 level as investors awaited crucial macroeconomic updates from both the US and Canada, seeking clearer market direction.

Thursday's economic calendar highlights include the monthly Canadian GDP report and the final US Q4 GDP print, along with customary releases such as Initial Weekly Jobless Claims, Pending Home Sales, and the revised Michigan Consumer Sentiment Index, all of which may influence short-term trading opportunities around the USD/CAD pair.