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European Central Bank (ECB) Governing Council member Villeroy said on Thursday that the ECBs next move is likely to be an interest rate hike as the Middle East conflict continues, but it is too early to determine when such a hike will be necessary. The ECB kept its key interest rate unchanged at 2% last month, but outlined several ways the conflicts development could affect the eurozones economic outlook. In an adverse scenario, disruptions to oil and gas transport via the Strait of Hormuz would continue until the end of the second quarter, keeping energy prices high. In this scenario, ECB economists predict average inflation this year will reach 3.5%, well above its 2% target. Villeroy said, "A prolonged conflict is clearly a negative factor. We are closer to a moderately adverse scenario than the baseline scenario. The ECB must remain vigilant as there are signs that inflation expectations are rising."The Russian Foreign Ministry announced on April 2 that Foreign Minister Sergey Lavrov and Saudi Foreign Minister Faisal held a telephone conversation that day, expressing serious concern over the continued deterioration of the military and political situation in the Persian Gulf region. Both sides emphasized the urgent need to end the military confrontation, which has resulted in civilian casualties and severe damage to civilian infrastructure, including to countries not directly involved in the conflict. They affirmed the need to intensify political and diplomatic efforts to peacefully resolve the Middle East crisis, based on international law and taking into account the legitimate interests of all countries in the region. Against this backdrop, both sides reiterated their firm commitment to maintaining close diplomatic policy coordination between Russia and Saudi Arabia, particularly within the framework of the United Nations.Ukrainian President Zelensky: Ukraine can help its partners support security in the Strait of Hormuz.According to TASS: Russian Foreign Minister Lavrov spoke by phone with the Iranian Foreign Minister.Energy services company Baker Hughes said Thursday that U.S. energy companies added the number of oil and gas rigs this week for the first time in three weeks. As an early indicator of future production, the number of oil and gas rigs increased by five in the week ending April 2, reaching 548. Baker Hughes said that despite this weeks increase, the total number of rigs is still 42 fewer than the same period last year, a decrease of 7.1%. Baker Hughes said that two oil rigs were added this week, reaching 411; and three gas rigs were added, reaching 130. Due to falling U.S. oil prices, prompting energy companies to focus more on improving shareholder returns and paying off debt rather than increasing production, the number of oil and gas rigs is projected to decline by about 7% in 2025, 5% in 2024, and 20% in 2023.

Ahead of preliminary US S&P PMI data, the XAU/USD remains sideways below $2,000, according to our Gold Price Forecast

Alina Haynes

Apr 20, 2023 13:49

 截屏2022-08-04 下午5.25.46_1024x576.png

 

In the early European session, the Gold price (XAU / USD) is exhibiting erratic movements near $1,994.00. The precious metal is in a state of indecision as investors await the release of preliminary S&P PMI data for the United States on Friday.

 

After violent swings influenced by the Federal Reserve's (Fed) Beige Book, the US Dollar Index (DXY) is showing signs of volatility contraction below 102.00. The declining trend of advances to consumer and business loans by U.S. commercial banks has intensified concerns of a recession in the U.S. economy, despite the fact that economic activity in 12 Fed districts remained virtually unchanged. To prevent a decline in asset quality, banks have tightened credit disbursement requirements.

 

In the meantime, S&P futures have recorded sizeable losses during the Asian session, as investors are wary of firms' comments regarding revenue guidance. The market anticipates that constrained credit conditions will impact the working capital management of cash-reliant companies, thereby affecting their output.

 

The market expects preliminary US S&P PMI data to reveal a Manufacturing PMI reading of 49.0, a decrease from the previous reading of 49.9. The Services PMI is anticipated to decrease to 51.5 from 52.6 previously reported.


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