Market participants remain vigilant as the second quarter unfolds

Gold and global equities surged to record levels as the first quarter of 2024 concluded positively. This rise was primarily due to central banks' commitments to potential rate cuts [EasyDNNnews:PaidContentStart]

Throughout the last fortnight, the dollar remained steady above 104 levels. The commodity market is proceeding cautiously ahead of the release of the US core personal consumption expenditures index. Concerns remained regarding potentially high inflation figures for February. Furthermore, prominent Federal Reserve officials like Federal Reserve Bank of Atlanta President Raphael Bostic, Federal Reserve Governor Lisa Cook, and Fed Governor Christopher Waller voiced opinions favouring delayed or reduced cuts this year. This sentiment led swap traders to reduce their bets on Fed easing, dropping to around 60 per cent for a possible June cut. 
 

Economic indicators from the US provided additional support, depicting a resilient economic landscape. GDP and consumer spending showcased robust growth, recording increases of 3.4 per cent and 3.3 per cent, respectively in the OctoberDecember quarter. Moreover, consumer sentiment surged to 79.4 by the end of March, reaching its highest level since July 2021. 

Gold's upward trajectory continued, supported by declining US Treasury yields and strong safe-haven demand, particularly during a holiday-shortened week. The COMEX Gold market experienced a historic rally, reaching an impressive USD 2,256 per troy ounce and concluding the quarter with approximately 9 per cent gains. While gold surged by 4 per cent weekly, silver's gains were limited to 1 per cent amid mixed trends in industrial metals. 

On the MCX Gold (June) chart, a significant 'V' shaped recovery was evident, surpassing its previous swing high and setting a new peak. Maintaining levels above ₹67,400 could potentially drive the counter towards its next resistance level at ₹68,900 per 10 grams. 

WTI Crude oil also saw substantial gains throughout March, ending the quarter with an impressive 16.5 per cent rise. This surge was attributed to OPEC+ output cuts and market expectations of lower interest rates. Additionally, signs of Russia complying with OPEC production pledges, shifting focus from exports to production, may further boost prices in the crude oil market. However, most base metals concluded the quarter on a weaker note, with concerns surrounding Chinese economic recovery and seasonal demand patterns. LME Copper managed a modest quarterly upside amidst proposals for production cuts from top copper smelters amid tight supply conditions. 

The release of US Core PCE figures during the Good Friday holiday met expectations, providing some stability to market sentiment. Although the Fed's preferred inflation gauge remained above the 2 per cent target, robust consumer spending indicated economic resilience despite higher borrowing costs. 

Looking forward, the commodity market focus is on the upcoming U.S. jobs data, which is poised to impact market dynamics significantly. A strong labour market could reduce the likelihood of a June rate cut further, while any signs of cooling may prompt the Fed to act sooner to prevent an economic slowdown. Forecasts indicate an increase of 2,05,000 in non-farm payrolls, with the unemployment rate expected to remain steady at 3.9 per cent. 

All in all, the first quarter of 2024 demonstrated resilience amid economic uncertainties, with gold and oil leading the commodity rally, while equities reached new heights. As the second quarter unfolds, market participants are vigilant, awaiting key economic indicators and policy decisions to inform their investment strategies in a dynamic global environment.

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