Gold Breaks $3100 as Eurozone Inflation Eyed
Markets kick off the final day of March focused on German inflation data and the Chicago PMI, with investors watching closely for clues on the direction of European monetary policy and U.S. manufacturing health. Preliminary estimates for Germany’s March CPI are expected to show further cooling, with the YoY rate forecast at 2.3%, down from 2.5% in February. Meanwhile, gold continues its breakout, pushing past $3,120 as safe-haven demand and central bank buying fuel a record-setting rally.
Key Data Ahead Today – Monday, March 31
ECB Speakers:
Panetta and Villeroy are both scheduled to speak today. Markets will be listening for any further dovish signals, particularly in light of falling inflation across the eurozone.
Germany CPI (March, Preliminary):
MoM: Expected at 0.3%, down from 0.4%.
YoY: Forecast to ease to 2.3%, reflecting slowing energy and food inflation.
HICP YoY: Seen at 2.4%, down from 2.6%.
A softer print would bolster expectations for ECB rate cuts in the second half of the year.
U.S. Chicago PMI (March):
Due at 13:45 GMT, consensus is 45.4, virtually unchanged from February’s 45.5. A reading below 50 continues to signal contraction in U.S. manufacturing, keeping recession concerns alive.
Commodities
- Gold: Surged to $3,122.74 (+1.24%) as the rally accelerates into quarter-end. With inflation pressures easing and rate cuts on the horizon globally, gold is benefiting from falling real yields and growing demand from central banks. YTD, gold is up nearly 19%, and 38.7% YoY.
- Silver: Also higher at $34.33 (+0.71%), supported by both investment demand and expectations of industrial recovery later in 2025.
- Oil: WTI trades at $69.90 (+0.77%) and Brent at $73.23 (+0.64%), both climbing after a steady week. Markets continue to digest supply constraints amid geopolitical tension, but oil remains down over 16% YoY, reflecting softer global demand and elevated inventories.
Currency Movements
- EUR/USD at 1.0812 (-0.16%): The euro is marginally weaker as traders await German inflation data and ECB commentary. A softer CPI could open the door to rate cut speculation heading into Q2.
- GBP/USD at 1.2939 (+0.03%): The pound is steady after last week’s solid GDP and retail sales figures. Markets are now watching for signs of inflation stickiness in upcoming UK data.
- AUD/USD at 0.6258 (-0.46%) and NZD/USD at 0.5689 (-0.47%): Both antipodeans are under pressure amid risk-off flows and continued weakness in Chinese demand signals.
- USD/JPY at 149.11 (-0.50%): The yen is firmer, recovering from recent lows as U.S. yields ease and traders position for potential BoJ policy shifts later this year.
- USD/CNY at 7.2609 (-0.13%): The yuan is stable as investors watch for further PBoC support amid signs of sluggish domestic growth.
- USD/CHF at 0.8814 (+0.07%): The Swiss franc is trading near recent lows, with limited volatility ahead of upcoming Swiss inflation data later this week.
- USD/CAD at 1.4346 (+0.27%): The loonie lags despite rising oil, pointing to broader USD strength and investor caution.
- USD/MXN at 20.39 (+0.11%): The peso continues to trade near recent highs after a strong Q1, but flows may moderate as quarter-end rebalancing kicks in.
- USD/INR at 85.51 (-0.04%): The rupee remains rangebound, supported by foreign inflows and a relatively balanced macro picture.
Market Outlook
Traders are positioning cautiously as March ends, with eurozone inflation and U.S. manufacturing data in focus. Any downside surprise in German CPI could strengthen expectations for ECB easing in the coming months. Meanwhile, gold’s relentless rise signals persistent caution in the backdrop of mixed economic signals.
With equities stable and volatility low, today’s macro releases may set the tone heading into Q2. A weak Chicago PMI and soft inflation print would likely support risk assets and weigh on the dollar, while any upside surprises could reset expectations on central bank timing.