Concerns about oil demand in the US weighed on prices this week. On the other hand, Saudi Arabia has indicated that OPEC is close to agreeing an extension to its output cuts, which are currently due to end in June. Elsewhere, the euro-zone flash composite PMI rose to a six-year high, whilst China’s activity and investment data for March were robust. What’s more, China’s official GDP growth edged up from 6.8% y/y in Q4 to 6.9% last quarter. However, tighter policy means that we still expect the economy to begin slowing before long. Meanwhile, the UK government’s announcement of a snap election in June had little impact on the value of safe-haven assets, such as gold.
Turning to next week, investors’ attention will probably be focused on the French elections, with the first results due to be released on Sunday evening. We do not expect much of a market reaction, but a stronger-than-predicted result for Mme. Le Pen would probably rattle investors’ nerves and push up gold prices. Later in the week, the US and UK are set to release their first estimates of Q1 GDP growth (both are due on Friday). We expect the data to show that growth in both economies has slowed but it should accelerate over the rest of the year.
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