Palladium prices fell on Tuesday even as the dollar lost ground against most major rivals, with traders concerned about weakening demand.

The Chinese Parliament has convened today to discuss ways to boost growth and deal with the real estate market after a crisis threatened progress and hurt minerals demand. 

Palladium could also be underpinned by the recent drop in the dollar, as the Fedwatch tool showed the odds for a Federal Reserve interest rate cut in June up to 52.5%. 

Markets await an important Congressional testimony by Fed Chair Jerome Powell later this week, which could provide important clues on the future of US interest rates. 

The dollar index fell 0.1% as of 17:06 GMT to 103.7, with a session-high at 103.9, and a low at 103.5.

Palladium June futures fell 3.3% to $941 an ounce as of 17:08 GMT. 

Global oil prices fell in American trade on Tuesday, extending losses for the second straight session away from four-month highs on profit-taking.

The losses came ahead of initial US inventory data from the American Petroleum Institute, which might show a crude inventory build for the fifth straight week. 

The losses are curtailed by OPEC+ recent  decision to extend production cuts, while China vowed to boost economic growth. 

Global Oil Prices 

US crude fell 1.55% to $77.55 a barrel, while Brent shed 1.3% to $81.75 a barrel, with a session-high at $83.01.

US crude lost 1.35% on Monday, the first loss in three days, away from a four-month high at $80.82, while Brent shed 0.7% away from November highs at $84.30. 

US Inventories 

The American Petroleum Institute will release initial data on US crude stocks later today, expected to show the fifth inventory buildup in a row, with official data released tomorrow from the EIA.

OPEC+ Cuts 

The OPEC+ coalition announced an extension to voluntary production cuts at 2.2 million bpd, which were scheduled to end this March. 

Saudi Cuts

Saudi Arabia additionally extended its separate voluntary cuts of 1 million bpd until the end of June. 

The country estimates Saudi production to remain at 9 million bpd in the next three months.

Russian Cuts 

Russia, a major member of the OPEC+ alliance, will also cut its production and exports by 471 thousand bpd until the end of June. 

 China’s Economic Vows

China’s government is aiming at 5% growth in 2024, and announced the issuance of special long-term government bonds valued at $138.9 billion to finance major projects. 

The dollar index rose in European trade for the first time in three days against a basket of major rivals, with gains still limited as US 10-year treasury yields lost ground.

The gains come ahead of important US services sector data for February, which could provide clues for the future of US interest rates.

The Index

The dollar index rose 0.1% to 103.95, with a session-low at 103.83, after closing down 0.1% yesterday, the second loss in a row as investors focused on lower-yield currencies.

US Treasury Yields 

US 10-year treasury yields fell 0.9% on Tuesday on track to hit multi-week lows, in turn boosting non-yielding assets. 

The gains came as investors once again believe the Federal Reserve will start cutting interest rates in June, maybe even May.

US Rates

The current odds for a 0.25% US interest rate cut in May stand at just 25%, while the odds for such a cut in June stand at 73%. 

US Services Sector 

Now investors await important US services data later today to get a better view of the state of the economy in the first quarter. 

US services PMI is expected down slightly to 53.0 in February from 53.4 in January.

Gold prices rose in European trade on Tuesday on track for the fifth profit in a row, scaling a three-month high after trespassing the psychological level of $2100 with the previous metal approaching record highs. 

The gains come amid a tumble in US 10-year treasury yields following recent US data, which bolstered the case for early US interest rate cuts in May or June.

Gold Prices Today 

Gold prices rose 0.4% to $2123 an ounce, with a session-low at $2110, after rallying 1.7% on Monday, the fourth profit in a row as the greenback lost ground. 

The yellow metal scaled a record high at $2146 an ounce on December 4th, 2023 on strong odds of early Federal Reserve rate cuts, and strong haven demand.  

US 10-year treasury yields fell 0.9% on Tuesday on track to hit multi-week lows, in turn boosting non-yielding assets. 

The gains came as investors once again believe the Federal Reserve will start cutting interest rates in June, maybe even May.

Weak Data

Recent Washington data showed US manufacturing slowed down more than expected in February, while Michigan University’s consumer confidence index fell as well. 

US personal spending data clocked in the weakest reading in three years.

 US Rates 

Following the data, the odds of a 0.25% Fed interest rate cut in May came at 25%, while the odds for such a cut in June rose to 73%.

Traders now expect 75 basis points of total Fed rate cuts this year, down from 150 basis points in previous forecasts. 

Investors also await important data this week, including the February payrolls report, and Fed Chair Jerome Powell’s Congressional testimony.  

Powell’s Testimony 

Markets await Fed Chair Jerome Powell’s Congressional testimony this week, which could provide crucial clues on the likely path ahead for policies and interest  rates. 

Federal Reserve member Raphael Bostic said the Fed isn’t exposed to urgent pressures to cut interest rates. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 2.3 tonnes yesterday, to a total of 821.47 tonnes, the lowest since July 26, 2019.