The international gold price has fallen, OPEC + has made a surprise move, and the FED may be forced into a corner

International gold prices fell, and the unexpected announcement of oil production cuts by the Organization of the Petroleum Exporting Countries and its partners (OPEC +) raised inflation concerns and raised the possibility that the Federal Reserve will raise interest rates at its May policy meeting. US March ISM manufacturing PMI data will be released later in the day, and the sub-indicator - the manufacturing new orders index - may contract further to 44.6.

On Monday (April 3), international gold prices fell, and the unexpected announcement of oil production cuts by the Organization of the Petroleum Exporting Countries and its partners (OPEC +) raised inflation concerns and raised the possibility of the Federal Reserve raising interest rates at its May policy meeting. The US March ISM manufacturing PMI data will be released later in the day, and the sub-indicator - the manufacturing new orders index - may contract further to 44.6.

Beijing time 15:23, spot gold fell 0.56% to $1959.38/ounce; COMEX gold futures main contract fell 0.50% to $1976.3/ounce; the dollar index rose 0.21% to 102.808.

Matt Simpson, senior market analyst at City Index, said: "Gold prices are falling as investors weigh the appeal of gold as a safe haven against the potential for higher long-term interest rates. Clearly, concerns about inflation and rising interest rates have won the argument. With the market now expecting higher Fed end point rates, gold prices could easily fall to $1,900."

The surge in oil prices following the announcement of a new round of cuts by OPEC + producers is a potentially ominous sign of stubbornly high global inflation, days after the US reported signs of slowing consumer spending growth in February and briefly boosted market optimism.

Rising oil prices could force merchants to raise prices for goods and services, which would push up the producer price index (PPI) and eventually the consumer price index (CPI), causing inflationary pressures in the US to rise sharply. Investors believe the Federal Reserve has no choice but to trigger an increase in interest rates. Fed Chair Jerome Powell is likely to announce another 25 basis point hike in May, pushing rates above 5%.

US March ISM manufacturing PMI data will be released later in the day. According to estimates, the manufacturing purchasing managers' index is expected to decline slightly to 47.5 from the previous value of 47.7. This may be the fifth consecutive month below the line of prosperity and contraction (50.0).

The sub-index of the ISM manufacturing PMI, the manufacturing new orders index, will be closely watched. The data provides clues about forward demand for goods, and the index is likely to contract steadily to 44.6 compared with the previously released 47.00. The subdued consensus on the US manufacturing PMI may be the result of the Federal Reserve's continued interest rate hikes to fight inflation.

Another catalyst that has had a big impact on gold prices has been the easing of market jitters about the US banking sector. Investors have digested the short-term panic that followed the collapse of several mid-sized banks and do not expect further deterioration in the future. Gold prices rose nearly 8 per cent in Quarter 1 after recent global banking turmoil fuelled bets that the Federal Reserve was about to pause interest rate rises.

Safe-haven demand for gold has weakened as turmoil in the U.S. banking sector eases, ANZ said in a report. Standard Chartered analyst Suki Cooper said in the report that gold purchases by central banks may not be as strong as in 2022.