03/06/2025 Evening Reports
• Spot gold slipped 0.7% to $3,358.76/oz in London, after Monday’s sharp rally — its strongest in four weeks.
• The Bloomberg Dollar Spot Index rose 0.2%, recovering from its lowest level since 2023, putting pressure on commodities.
• Friday’s US Nonfarm Payrolls data is in focus – expected to steer the Federal Reserve’s next policy steps.
• Despite the short-term retreat, gold is still up over 25% YTD, driven by geopolitical risk and inflation hedging.
• Ongoing trade tensions — with the US facing backlash from both China and the EU — continue to boost gold’s long-term appeal as a safe haven.
• Goldman Sachs recently advised investors to increase exposure to gold and oil as portfolio hedges, citing institutional instability and commodity supply risks.
• Broader metals market also retreats: Silver, platinum, and palladium slipped in tandem with gold.
Global Market Context
• China accused the US of “seriously undermining” the trade truce.
• The EU warned of retaliatory measures if new US tariffs are imposed.
• Trump administration’s aggressive trade posture adds fuel to macro volatility.
What’s Next?
• While the current gold pullback is technical and dollar-driven, the fundamental case for gold remains intact — especially with stagflation risks, central bank uncertainty, and geopolitical instability in play. A data-dependent Fed and fragile sentiment may continue to create swings, but gold’s role as a defensive asset appears far from over.
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OECD: Trade Wars Threaten Global Growth
The OECD announced that U.S. President Donald Trump’s trade wars have slowed global economic growth and increased inflation. The organization lowered its global growth forecast for 2025 from 3.3% to 2.9%. The U.S. economy is expected to slow from a growth rate of 2.8% in 2024 to 1.6% in 2025.
OECD Chief Economist Álvaro Pereira emphasized the importance of countries reducing trade barriers, stating, “Otherwise, the impact on growth will be quite significant.”The OECD highlighted that trade tensions are having negative effects on investment and price stability, weakening global economic confidence.
US Factory Orders Slump in April
New orders for U.S.-manufactured goods dropped sharply in April and business spending on equipment appeared to have lost momentum at the start of the second quarter as the boost from front-loading of purchases ahead of tariffs faded. Factory orders fell 3.7% after an unrevised 3.4% jump in March, the Commerce Department’s Census Bureau said on Tuesday. Economists polled by Reuters had forecast factory orders declining 3.1%. They rose 2.0% on a year-on-year basis in April.
Wall Street Rises on Chip Gains, Hopes for Tariff Talks
U.S. stock indexes advanced on Tuesday, led by chipmakers like Nvidia and Broadcom, as investors looked ahead to potential trade negotiations that could clarify the Trump administration’s evolving tariff agenda. Hopes were buoyed by news that President Trump and Chinese President Xi Jinping are expected to speak this week, reviving diplomatic momentum.
The administration has asked trade partners to submit their best offers by Wednesday, aiming to accelerate negotiations ahead of a self-imposed deadline five weeks out. Analysts view ongoing dialogue as a positive sign for markets, even without immediate breakthroughs.
At midday, the Dow gained 0.34%, the S&P 500 rose 0.51%, and the Nasdaq climbed 0.82%, with tech stocks leading the rally. However, mixed economic data—rising layoffs, a drop in factory orders, and destocking by retailers like Kenvue—reflect lingering concerns about the broader impact of tariffs. Investors now await Friday’s jobs report and further Fed commentary for direction.
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