- US PPI drops unexpectable in February, Retail Sales decline more than expected.
- Credit Suisse shares hit new lows, tumbling by almost 30%.
- Gold bounces 2% from its daily low, and climbs to its highest since early February.
Gold price resume the upside on Wednesday, boosted by risk aversion across financial markets, triggered by worries about the health of Credit Suisse. The yellow metal rose further after the release of US data that came in below expectations, adding to speculations about a softer Federal Reserve.
XAU/USD peaked at $1,930, its highest level since February 2. From last week, gold has risen almost 8% supported by the sharp decline in global government bond yields.
Worries and data
The rally in gold has just receive another boost from US data. The US Producer Price Index dropped unexpectedly in February by 0.1%; market consensus was for a 0.3% increase. The core PPI stayed unchanged and the annual rate fell from 5.4% to 4.4%, well below the 5.2% expected. A different report showed retail sales fell by 0.4% in Febuary, more than the 0.3% estimated.
US economic numbers favors the scenario of a softer Fed that will have its meeting next week. US yield printed fresh lows, approaching to Monday’s bottom. The US 10-year yield is at 3.47% down 6% for the day; while the 2-year is at 3.90%.
Prior to US data, bonds were already on demand and gold was higher boosted by banking-industry jitters. Credit Suisse’s main shareholder, the Saudi National Bank ruled out providing more money and pushed banks stocks across the globe to the downside. Credit Suisse shares area falling almost 30%.
Technical levels
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