Fed Signals Rates Will remain Unchanged Despite Market Bets on Looming Cuts

China–U.S. Trade War

Central Bank

Summary:

Longer-term inflation expectations remain largely grounded, but a few Fed policymakers have taken note of a sharp rise in short-term inflation expectations .

Federal Reserve policymakers have signaled that short-term interest rates will remain unchanged as they wait for clearer signs that inflation is nearing the U.S. central bank's 2% goal or until there is a whiff of a deteriorating job market.

The data so far has presented neither of those scenarios to the Fed, and though economists say the real drag from President Donald Trump's aggressive import tariffs lies ahead, there is a great amount of uncertainty over where the policies will end up and the degree and timing of their impact on prices and jobs.

"The cone of possibilities," as Cleveland Fed President Beth Hammack put it recently, is quite large, and includes the possibility of persistently higher inflation coupled with a slowdown in economic activity that would require the central bank to pick which battle to fight.

That dilemma has not stopped traders from betting that by June a faltering economy will likely move the Fed to resume its rate cuts, ultimately lowering borrowing costs by a full percentage point by the end of this year. They added to those bets on Wednesday after data showed the U.S. economy shrank last quarter and the Fed's preferred measure of price inflation did not rise at all on a monthly basis in March.

But while economists say such a rate-cutting scenario is not out of the question, they are quick to note that inflation remains elevated, and is likely to worsen at least temporarily as retailers raise prices to cover higher costs from the sharp increase in import levies.

The Personal Consumption Expenditures Price Index excluding volatile food and energy prices, which Fed officials feel maps best to where inflation is headed, eased to 2.6% in March from 3% in February, the data showed.

Longer-term inflation expectations remain largely grounded, but a few Fed policymakers have taken note of a sharp rise in short-term inflation expectations that they worry could set the stage for a resurgence in price pressures.

"The Fed's in a very tricky spot; you have inflation that is already above target, you have inflation expectations that are, sort of showing that, perhaps they're becoming a little unhinged," said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. "And we're now waiting for the inflation to show up on the back of tariffs. I mean, the Fed is on hold."

At the same time, Fed policymakers are keenly focused on the potential for tariffs to slow the economy and potentially trigger layoffs, a situation that in the absence of persistent inflation would move them to cut rates, perhaps sharply. That's not evident so far.

'PERIOD OF STAGNATION'

The U.S. economy contracted by an annualized 0.3% last quarter in large part because U.S. businesses rushed to buy imported goods ahead of Trump's tariffs. The report also showed consumer spending down-shifted from a 4% growth pace last quarter to a still-decent 1.8%, and business investment soared.

The GDP report overall would allow the Fed to continue to characterize economic activity as "solid," though only in the rear-view mirror, said Gregory Daco, chief economist at EY Parthenon.

"This shock is unlike anything we've seen before," Daco said. "It's a massive self-imposed supply shock resulting from policy uncertainty, market volatility, surging tariffs and monetary policy inertia."

The front-loading of demand in the first quarter, he said, sets the stage for a drop-off in demand this quarter, "a far more troubling phase of the ongoing economic slowdown."

Or as Pantheon Macro economists wrote, "A period of stagnation now likely lies ahead if the current set of tariffs is maintained, with recession the most likely outcome" if the sweeping import duties Trump announced on April 2 and then partially paused come into force in July. The Trump administration, which this week eased some tariffs on automakers, says trade talks are ongoing.

On Friday policymakers will get some of the first data on the current quarter, with the Labor Department's closely watched monthly jobs report expected to show a slowdown in hiring but no change in the 4.2% unemployment rate.

The Fed is nearly universally expected to hold its benchmark overnight interest rate in the current 4.25%-4.50% range at the end of a two-day policy meeting next week.

Futures contracts that settle to the Fed's policy rate continue to suggest that the rate cuts would resume in June, with a total of four quarter-percentage-point reductions likely. The U.S. central bank cut rates three times last year, for a total of 100 basis points of easing.

Source: Reuters

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Manuel

Economic

Forex

Investors were left with little clarity on Wednesday about the health of the U.S. economy despite a fresh report on gross domestic product, with the fallout from President Donald Trump's sweeping tariffs muddying growth signals.

On its face, the first-quarter data showing the first U.S. economic contraction since 2022 was alarming and brought immediate pressure on U.S. stocks.

But some economists had braced for an even deeper contraction and were encouraged by the data. The weakness stemmed from a surge in imports as businesses sought to avoid higher costs from the new tariffs, a phenomenon that many analysts said was poised to reverse in coming months.

Investors faced a similar position as they had before the highly anticipated report, vulnerable to twists and turns in Trump's very much unresolved trade war that stood to keep markets on edge and the potential for a recession still on the table.

"There's just massive distortion and volatility in the economic data right now because of the pull-through of tariffs," said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management. The GDP report "doesn't help shake off this economic contraction fear that has been gripping markets."

U.S. gross domestic product fell at a 0.3% annualized rate last quarter. Imports jumped at a 41.3% rate, resulting in a large trade gap that chopped off a record 4.83 percentage points from GDP.

"It's more frustration for the long term investor because you're not getting a really good read on what the actual economy is doing," Mark Hackett, chief market strategist at Nationwide. "We need to know what's happening in the economy ... and reports like this don't give us a lot of useful data on that."

Larry Werther, chief U.S. economist of Daiwa Capital Markets America, said he was encouraged that consumer spending, which accounts for more than two-thirds of the economy, grew at a 1.8% rate, indicating "the domestic economy was still on track" in the first quarter.

Recession was not Werther's base assumption "but odds of it in the next 12 months have increased substantially" from the start of the year, he said.

Meanwhile, the persistent uncertainty itself poses a risk to markets.

"This period where tariffs are trying to be negotiated and acknowledged by the market makes things extremely difficult to model, predict, etc," said Peter Andersen, founder of Andersen Capital Management in Boston.

STOCKS FALL AFTER GDP REPORT

Stock futures fell sharply after the report but major averages pared some of their losses by mid-day. The S&P 500 was last off about 1%, and down 10% from its February record high.

Wednesday's data leaves investors at a crossroads: On the one hand, even allowing for the one-off tariffs-related hit, the growth picture looks lackluster; while on the other hand, with markets braced for the worst, any signs of better-than-expected data in coming months could spark a rally in risk sentiment.

"People are positioned conservatively ... and when that happens, it doesn't take a ton of good news to move the markets pretty violently positive," Nationwide's Hackett said.

In the meantime, investors are trying to position for a variety of outcomes. Lack of clarity on the tariff situation is leading Sonu Varghese, global macro strategist at Carson Group, to favor a "barbell" approach to portfolios, with defensive, low-volatility stocks at one end and high-momentum, growth equities at the other.

Investors will quickly get another view of the economy on Friday, with the release of the U.S. employment report.

"Everything else is skewed because of tariffs ... but right now consumption is still holding the economy together," Varghese said.

"If the labor market starts to falter here, then we have a big problem going forward."

Source: Reuters

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Thomas

Economic

Commodity

It had already been a miserable month for oil, which has suffered its worst monthly performance since 2021 and also is on pace for its month of April on record... and then it got even worse when shortly before noon ET, when Reuters reported, citing multiple sources, that Saudi Arabian officials are briefing allies and industry experts to say the kingdom is unwilling to prop up the oil market with further supply cuts and can handle a prolonged period of low prices.

This shift in Saudi policy could suggest a move toward producing more and expanding its market share, a major change after five years spent balancing the market through deep output as a leader of the OPEC+ group of oil producers. Those cuts had supported prices, in turn bolstering the oil export revenue that many oil producers rely on, but many OPEC+ members - most notably Kazakhstan - took advantage of the production restraint and blew away through their export quotas, infuriating other cartel members.

Sure enough, Reuters notes that Riyadh has been angered by Kazakhstan and Iraq producing above their OPEC+ targets. And after pushing members to adhere to those targets and to compensate for oversupply in recent months, a frustrated Riyadh is changing tack, OPEC+ sources said.

Saudi Arabia pushed for a larger-than-planned OPEC+ output hike in May, a decision that helped send oil prices below $60 a barrel to a 4-year low.

And now that Kazahkstan blew it for all cartel members, everyone will share the pain equally, as lower prices are bad news for producers that rely on oil exports to fund their economies. Although producers like Saudi have a very low cost of production, they need higher oil prices to pay for government spending. When oil prices fall, many large oil-producing countries come under pressure to cut their budgets.

And just to confirm that they are not bluffing, the Saudis appear to be briefing allies and experts that they are ready to do just that. The last time they did just that was in March 2020, just before covid shut down the global economy and briefly sent oil prices negative, sparking budget crises across all OPEC members.

Saudi officials in recent weeks have told allies and market participants the kingdom can live with the fall in prices by raising borrowing and cutting costs, the five sources said.

"The Saudis are ready for lower prices and may need to pull back on some major projects," one of the sources said. All sources declined to be named due to sensitivity of the issue.

The problem is that Saudi Arabia needs oil prices above $90 to balance its budget, higher than other large OPEC producers such as the United Arab Emirates, according to the International Monetary Fund (IMF). As a result, Riyadh may need to delay or cut back some projects due to the price drop, analysts have said.

OPEC+, which besides the Organization of the Petroleum Exporting Countries also includes allies such as Russia, may decide to speed up output hikes again in June, OPEC+ sources have said. OPEC+ is cutting output by over 5 million barrels or 5% of global supply, to which Saudi Arabia is contributing two-fifths.

Russia, the second largest exporter in OPEC+ behind Saudi Arabia, is aware of Riyadh's plans for faster output increases, said two of the five sources who are familiar with the Russian thinking and conversations with Riyadh. Even so, Russia would prefer the group stick to slower output increases.

Saudi Arabia and Russia, the de facto leaders of OPEC+, make the biggest contributions to OPEC+ cuts. Russia's budget balances at about $70 a barrel and the Kremlin's spending is on the rise due to the Russian war in Ukraine.

Russia may see a further fall in revenue as prices for its discounted, sanctioned oil could fall below $50 a barrel as a result of OPEC+ output rises, one of the two sources said.

Theories on the apparent change in Saudi strategy range from punishing OPEC+ members exceeding their quotas to a move to fight for market share after ceding ground to non-OPEC+ producers such as the United States and Guyana. Higher output may also be a fillip to U.S. President Donald Trump, who has called for OPEC to boost output to help keep U.S. gasoline prices down.

Trump is due to visit Saudi Arabia in May and could offer Riyadh an arms package and a nuclear agreement. OPEC+ decided to triple its planned output increase to 411,000 bpd.

That still leaves OPEC+ holding back more than 5 million bpd, curbs the group aims to unwind by the end of 2026.

"We would still call this a 'managed' unwind of cuts and not a fight for market share," UBS analyst Giovanni Staunovo said.

“This confirms the market’s fears that Saudi Arabia’s accelerated unwinds were not temporary, but a long-term strategy shift,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. It raises the question of whether “Saudi is going to repeat the 2020 playbook to dramatically increase production.”

For now the market is voting "yes", and the news sent WTI tumbling as much as 4%,or more than $2 to just under $58, the lowest price since early 2021 (and a level which was only briefly breached after Trump's Liberation Day sent oil to $55 before rebounding rapidly).

OPEC+ rocked the crude market in early April, with a surprise decision to increase supply in May by 411,000 barrels a day, the equivalent of three monthly tranches from a previous plan. Morgan Stanley has said it expects a “meaningful surplus” to develop over time, while JPMorgan Chase & Co. warned the cartel may accelerate planned production increases at a meeting next week.

Beyond OPEC+, non-cartel nations are also expected to add supplies, including drillers in Canada and Guyana, feeding concerns about a global glut.

At the same time, hopes are fading that there will be quick breakthroughs in US-led trade negotiations, weighing on the outlook for energy demand. The US economy contracted for the first time since 2022 in the first quarter as a result of a surge in pre-tariff imports and softer consumer spending. In China, factory activity slipped into the worst contraction since December 2023, revealing early damage from the trade war.

Source: Zero Hedge

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Adam

Economic

China–U.S. Trade War

European manufacturers no longer know which saint—or which president—to turn to. Their profits are plummeting, their forecasts are melting like snow in the sun, although their shares are resisting on the stockmarket. The reason? Another sleight of hand by Donald Trump.

On Wednesday morning, the automotive sector index was performing fairly well. Stellantis gained 2%, while Mercedes and Volkswagen each rose 1%. What do they have in common? The publication of sluggish quarterly results and the withdrawal of their annual forecasts. Manufacturers are mired in a tariff storm from Washington. But all it took was a decree from Donald Trump, softening – slightly – the shock of his own taxes, to put a smile back on investors' faces.

Forecasts thrown out of the window

European car manufacturers have no visibility for the rest of the year. Stellantis and Mercedes have simply withdrawn their 2025 forecasts. Volkswagen, for its part, has guided towards a margin just at the lower end of the previously announced range. The day before, Volvo Car threw in the towel for the next two years.

The backdrop is the same anxiety: the impact of tariffs on imported parts imposed by the Trump administration. These measures are disrupting global production chains and driving up manufacturing costs in an already tense environment marked by the transition to electric vehicles and competition from China.

The White House hears the cry for help

Faced with discontent in the sector, Donald Trump has pulled a partial concession out of his hat. On Tuesday, he signed an executive order allowing car manufacturers producing in the United States to benefit from tax credits on certain imported parts. This is a way of temporarily calming the situation and avoiding social unrest in the Midwest, the historic stronghold of the auto industry.

"The president's leadership allows for more investment in the US economy," said Mary Barra, CEO of GM. Jim Farley of Ford echoed her sentiments. It's likely that the statements had been prepared well in advance of the president's visit to Michigan, the birthplace of Detroit and an ideal political showcase.

But behind the smiles, the concern remains palpable. GM has suspended its own forecasts despite solid results. A conference with analysts has even been postponed until the situation becomes clearer. It seems that even the American giants no longer know how to interpret the signals coming from Washington.

The stockmarket follows the emotion

What is striking about this picture is the growing disconnect between economic performance and market reaction. Industry is faltering, margins are shrinking, visibility is disappearing... but stock prices are rising. Because in a post-truth society, a statement or a decree can turn everything upside down. Because investors are now betting on politicians' intentions rather than on quarterly figures.

We could laugh about it if it weren't so revealing of the prevailing feverishness. The automotive sector, a pillar of European industry, finds itself dancing to the unpredictable tune of the US president. Manufacturers are suspending their forecasts, but the markets are already anticipating the next U-turn.

This feverishness is reflected in the very disparate performances of carmakers on the stock market since the beginning of the year. These performances depend on an explosive mix of commercial momentum, supply chain structure, assembly site location, ability to bow to pressure from Washington, and a whole range of other variables. Stellantis (-33%) comes in last, while Volkswagen is curiously in pole position (+11%). Another example is that the market values Ford (+2.5%) more than General Motors (-12%). There is also a wide gap between Renault (+1.5%) and Tesla (-28%). In such a context, it is hardly surprising that the automotive sector's valuation multiple is among the lowest on the stock market: the median P/E ratio for the sector in 2026 is 5.35x, excluding Tesla (106x) and Ferrari (40x). Investors have no reason to pay more for such a lack of visibility.

Source: marketscreener

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Catherine Richards

Commodity

Crude oil prices are headed for their worst monthly drop since 2021 as fears over a global economic downturn and demand shock as a result of tariffs come as the supply of oil is about to surge.

West Texas Intermediate crude oil prices, the US benchmark, were down over 3.5% on Wednesday to trade as low as $58.20 a barrel, while Brent crude, the international benchmark, also fell over 3.5% to as low as $60.93 a barrel.

WTI crude oil prices have lost over 16% this month, while Brent crude has dropped closer to 17%, the largest monthly decline since November 2021.

Wednesday's drop followed data out early Wednesday that showed the US economy contracted in the first quarter for the first time in three years. Labor market data also showed slower hiring in the US than forecast, a signal that tariffs may be weighing on economic growth.

These reports followed data out of China this week that showed factory activity in the country contracting at the fastest rate in over a year, stoking further worries that the US-China trade spat will hurt growth and, in turn, global oil demand. China is the world's largest crude oil importer.

An increase in supply is also expected next month from the Organization of Petroleum Exporting Countries and its allies (OPEC+), putting pressure on prices. A report from Reuters suggested that another increase in production is being contemplated to take effect in June.

The S&P 500 has been in recovery mode in recent weeks, recovering some of its steep early April declines amid an optimistic tone from Trump officials on tariff reprieves and potential deals.

Oil prices, however, have not seen the kind of support from investors enjoyed by stocks during a moderating of trade tensions through April.

"While the recent de-escalation in trade talks has certainly reduced the probability of a bear case, that doesn't imply that the 'Trump put' extends over the energy sector, as President Trump and his aides continue to pursue lower oil and gasoline prices — as low as $50 per barrel," wrote JPMorgan's Natasha Kaneva and her team on Tuesday.

On the demand side, "the markets may be underestimating the final tariff levels that the Trump administration plans to impose on US imports," said Kaneva.

On the consumer side, gas prices have actually risen over the month of April amid increased demand and better weather across much of the country. Data from AAA showed the average per-gallon cost of regular gas stood at $3.18 as of Wednesday, up from $3.16 a month ago.

Source: Yahoo Finance

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Kevin Du

Economic

On the 101st day of Donald Trump’s second term as president came news that the US economy shrank during the first quarter. Perhaps it’s not surprising then that polling shows his support is contracting as well. Joshua Green explains how the two are connected. Plus: The Elon, Inc. podcast reviews Elon Musk’s 100 days in government.

Donald Trump rode back into office on expectations that he’d turbocharge the American economy. Polls showed voters were sick of inflation, nostalgic for the economy of Trump’s first term and willing to overlook doubts about his character and temperament because they liked his promise to bring down prices “on Day 1” and spark an economic “boom like no other.”

With the first 100 days of Trump’s term now in the books, however, many Americans are experiencing buyer’s remorse. Much of their dissatisfaction is rooted in frustration with what was supposed to be Trump’s great strength: managing the economy.

At a rally on Tuesday night in Michigan, Trump characteristically sought to paint a much rosier picture, declaring his early tenure “the most successful first 100 days of any administration in the history of our country.” But a flood of recent economic and polling data suggests Trump and Republicans face serious political jeopardy if they don’t turn things around soon.

To begin with, the Day 1 revival that Trump promised voters didn’t happen. Instead, they got a trade war that’s shaken the foundations of the global economy. Prices haven’t fallen, as Trump claimed they would. But equity markets have dropped sharply. So has the overall US economic outlook. And supply shortages could soon hit US retailers, because cargo shipments have plummeted in response to 145% tariffs on Chinese imports.

Instead of animal spirits fueling a “Trump boom,” as many forecasters had predicted, the president’s haphazard imposition of steep tariffs on enemies and allies alike has caused recession fears to rear up, as trade partners retaliate with levies of their own and businesses freeze investments and cut earnings outlooks. “America is a brand,” hedge fund magnate and Trump supporter Ken Griffin complained last week, and “we are eroding that brand.”

Voters are paying close attention to Trump’s actions and responding with historic levels of alarm. Consumer sentiment in the University of Michigan’s survey plunged after he announced his “Liberation Day” tariffs on April 2. The percentage of Americans who expect unemployment to rise is now higher than at any point since the Great Recession. Inflation expectations have skyrocketed too. The University of Michigan survey found that Americans now expect prices to rise at a 6.5% rate over the next year—almost triple the 2.4% the federal government reported in March, and the highest year-ahead expectation since 1981, according to the survey. Perhaps most problematic from a political standpoint, a growing number of Americans say they expect the financial pain to hit them personally. For the first time this century, a Gallup Poll found that a majority—53%—say their personal finances are getting worse.

The collapsing faith that Trump will improve economic conditions could spell serious trouble for him and Republicans. After all, polling in last fall’s presidential race showed that among voters who viewed the economy negatively, a staggering 69% backed Trump. With so many measures of economic sentiment cratering, what are those voters thinking now?

Yet this hasn’t triggered the kind of concern among Republicans that some political professionals think it should. “Trump’s numbers on the economy have been the bedrock of his support throughout his political career,” says Alex Conant, a Republican strategist and partner at Firehouse Strategies. “Now, for the first time we’re seeing erosion because of the tariffs. That’s a huge political problem if it continues—if we go into midterms with voters having lost trust in his ability to handle the economy, we’re going to lose in places that haven’t been competitive for a decade.”

Last weekend, Republicans and Trump fans gathered at parties across Washington that spun off from Saturday’s White House Correspondents’ Association dinner. Guests at the MAGA parties I attended mostly shrugged off concerns about Trump’s standing. Some expect his top legislative priority—a $4.5 trillion tax cut—to turn things around for him. Others, such as Rasmussen pollster Mark Mitchell, claim that polls showing Trump’s support eroding are merely a liberal “psyop.”

But there’s overwhelming evidence that Trump’s standing is indeed slipping significantly. The latest ABC News-Washington Post poll pegs his job approval rating at just 39%, the lowest of any president at the 100-day mark in 80 years. The Associated Press poll also has Trump deeply underwater, with a 39%-59% approval-disapproval disparity.

For Republicans who don’t buy the president’s claim that pollsters are afflicted with “Trump Derangement Syndrome,” there’s a deeper concern: his growing weakness among voter groups he’d only recently started to win over. Among Hispanics—the fastest-growing bloc of GOP support—a poll by the Pew Research Center shows Trump with an approval rating of just 27%, while 72% disapprove (down from 36% approve, 62% disapprove on Feb. 2). Among young men, who flocked to him last fall, Trump’s approval in the latest Harvard Kennedy School Institute of Politics poll sits at 34%, with 59% disapproving.

Much of the dissatisfaction is tied to Trump’s handling of the economy. In January, 62% of young men in the Harvard poll approved of his stewardship. Today, they’re losing faith. Only 19% believe the economy is headed in the right direction, and 66% of those in college expect to have a difficult time finding a job after graduation.

As Democrats learned the hard way, these critical voting groups are highly sensitive to economic pressures—from gas prices to grocery bills to mortgage rates—and can decisively swing an election. They shifted right during the high-inflation years of the Biden administration. Now, just 100 days into Trump’s second term, they’re delivering a clear warning: Unless economic conditions improve, they’re likely to swing back left.

Explainer: Why Did the US Economy Shrink in Early 2025?

The 100th day of the second Trump administration also marked about 100 days since Elon Musk transformed the US Digital Service into what he and Trump contend is a government cost-cutting initiative named after Musk’s favorite crypto coin. With the Trump news cycle more intense than ever and Musk the fastest-moving part of it, a new episode of the Elon, Inc. podcast attempts to make sense of the past three-and-a-half months. Host David Papadopoulos gathers Bloomberg Businessweek senior writer Max Chafkin, Bloomberg Elon Musk reporter Dana Hull and Bloomberg technology reporter Kurt Wagner to break down Musk’s activities as his days as a special government employee are wrapping up.

Source: Bloomberg Europe

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Adam

Commodity

Gold prices are lower in early U.S. trading Wednesday, but have moved up from overnight lows following some downbeat U.S. economic data just out. Silver prices are sharply down. June gold was last down $34.90 at $3,299.50. May silver prices were last down $1.10 at $32.175.

The just-released ADP national employment report for April was a big downside miss, showing a gain of 62,000 jobs versus expectations for up 120,000. Also, the first-quarter U.S. GDP number came in at down 0.3% versus expectations for a rise of 0/4%, quarter-on-quarter. These numbers fall into the camp of the monetary policy doves, who want the Federal Reserve to lower U.S. interest rates sooner rather than later.

Asian and European stock markets were mixed to firmer in overnight trading. U.S. stock indexes are pointed to lower openings today in New York. Broker SP Angel writes the stock markets “have settled into a state of calm” as U.S. Treasury yields have dipped and the volatility index (VIX) has also declined. This is putting strong selling pressure on the safe-haven gold market at mid-week. The key question yet to be answered is: Has the worst of the trade-tariff anxiety in the marketplace passed? If the answer turns out to be yes, then the global stock markets have put in major bottoms. If the answer is no, then a more dour scenario of prolonged stock market weakness and even global economic recession becomes more likely.

China’s economy is starting to feel the effects of the trade war with the U.S. China’s new export orders plummeted in April to the lowest levels since the pandemic, with overall manufacturing activity the weakest in more than a year. Dow Jones Newswires reports, “The sharp pullback shows Trump’s eye-watering tariffs on Chinese imports are starting to squeeze the engine room of China’s economy, piling pressure on Beijing to boost its stimulus efforts to shore up growth.”

The key outside markets today and see the U.S. dollar index slightly higher. Nymex crude oil futures prices are weaker and trading around $59.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.17%.

A busy slate of U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the first estimate of first-quarter GDP, the employment cost index, the Chicago ISM business survey, pending home sales, personal income and outlays and the weekly DOE liquid energy stocks report.

Gold price down but up from overnight lows after weak U.S. data_1

Technically, June gold futures bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $3,509.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,200.00. First resistance is seen at this week’s high of $3,363.80 and then at last Friday’s high of $3,384.10. First support is seen at $3,300.00 and then at last week’s low of $3,270.80. Wyckoff's Market Rating: 7.0.

Gold price down but up from overnight lows after weak U.S. data_2

May silver futures bulls have the firm overall near-term technical advantage. Prices are in an uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $35.00. The next downside price objective for the bears is closing prices below solid support at $32.00. First resistance is seen at last week’s high of $33.69 and then at $34.00. Next support is seen at this week’s low of $32.585 and then at $32.00. Wyckoff's Market Rating: 7.0.