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On April 26, according to the Wall Street Journal, in order to simplify the negotiations on reciprocal tariffs, US negotiating officials plan to use a new framework developed by the Office of the United States Trade Representative (USTR), which lists major categories of negotiations, such as tariffs and quotas, non-tariff trade barriers, digital trade, product origin principles, economic security and other commercial issues. In these categories, US officials will put forward specific requirements for individual countries, but people familiar with the matter emphasized that this document may also be adjusted at any time. People familiar with the matter said that the United States initial plan is to negotiate with 18 major trading partners in turn over the next two months. The initial plan is to alternately participate in the talks with six countries per week for three weeks (six countries in the first week, another six countries in the second week, and another six countries in the third week) until the deadline of July 8. If US President Trump does not extend the 90-day suspension period he set by then, those countries that cannot reach an agreement will begin to face reciprocal tariffs.On April 26, after the United States announced additional tariffs on goods from many countries, Peruvian business people expressed concerns that the US governments extreme measures would disrupt the global trade order and may even trigger a global economic recession. Alvaro Barrenechea Chavez, vice president of the Peruvian-Chinese Chamber of Commerce, said that the negative impact of the US tariff policy has begun to emerge and hoped that the US government would rethink. Recognizing the importance of countries working together to promote development, I think this is the best way to become a true "world citizen."Market news: Musks xAI company plans to raise about US$20 billion in a financing round.Conflict situation: 1. Ukrainian top commander: Russia tried to use air strikes as a cover to increase ground attacks, but was repelled by Ukraine. 2. Ukrainian Air Force: Russia launched more than 103 drones in the night attack on Ukraine. 3. Local officials said Ukraine launched an attack in the Belgorod region of Russia, killing two people. 4. The local governor said that Russia launched an attack on the Dnipropetrovsk region of Ukraine, killing one person and injuring eight people. Peace talks: 1. Trump: ① The situation between Russia and Ukraine is gradually becoming clear, and they are "very close" to reaching an agreement. ② Ukraine is unlikely to join NATO. ③ Ukraine has not yet signed the rare earth agreement and hopes that the agreement can be signed immediately. ④ It is foreseeable that the United States will conduct commercial cooperation with Ukraine and Russia after reaching an agreement. 2. Russian Foreign Minister: Russia is "ready to reach an agreement on Ukraine." 3. Russian Presidential Assistant Ushakov: Russia and the United States will continue to maintain active dialogue. 4. Russian Presidential Assistant: Putin discussed the possibility of resuming direct negotiations between Russia and Ukraine with the US envoy. 5. The differences between the United States, Europe and Ukraine are clear. The documents show that European countries and Ukraine have raised objections to some of the US proposals to end the Russia-Ukraine conflict. 6. Market news: As part of the peace agreement, the United States asked Russian President Putin to abandon the demilitarization requirement. Other situations: 1. President of Hungarys OTP Bank: We hope to return to all business areas in Russia after the (Russia-Ukraine) conflict ends. 2. Ukrainian President Zelensky: US ground forces are not necessary for Ukraine. 3. Trump said Crimea will remain in Russia, Zelensky: Never recognize it. Agreeing with Trumps view, Crimea cannot be recovered by force. 4. NATO Secretary-General Rutte met with Trump and senior US officials to discuss defense spending, NATO summit, and the Ukrainian conflict.Rising global trade risks, overall policy uncertainty and the sustainability of U.S. debt top the list of potential risks to the U.S. financial system, according to the Federal Reserves latest financial stability report released on Friday. This is the first time the Fed has conducted a semi-annual survey on financial risks since Trump returned to the White House. 73% of respondents said that global trade risks are their biggest concern, more than double the proportion reported in November. Half of the respondents believe that overall policy uncertainty is the most worrying issue, an increase from the same period last year. The survey also found that issues related to recent market turmoil have received more attention, with 27% of respondents worried about the functioning of the U.S. Treasury market, up from 17% last fall. Foreign withdrawals from U.S. assets and the value of the dollar have also risen on the list of concerns.

Due to U.S. Inflation Issues, The Price of Gold Has Remained Near $1,800

Aria Thomas

Feb 16, 2023 10:41

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Stickier-than-expected Inflation in the United States is becoming a problem for gold, holding it around $1,800, with technical charts showing a decline to $1,700 if no clear breakout occurs.


Wednesday's closing price for gold for April delivery on the New York Comex was $1,845.30 per ounce, a decrease of $20.10, or 1%.


The spot price of gold, which some traders track more closely than futures, was $1,837.97 at 16:00 ET (21:00 GMT), down $16.50 (or 0.9%).


Initially, it was anticipated that gold would surpass $2,000 per ounce in the first quarter of this year, reversing the decline experienced in April 2022. Gold futures reached 10-month highs near $1,975 before the release of the January U.S. non-farm payrolls report, which revealed massive employment gains and reignited inflation fears. In the aftermath, gold fell below $1,830 before rising to roughly $1,875.


The release of this week's Consumer Price Index, or CPI, report for January on Tuesday further exacerbated U.S. inflation concerns, causing gold to fall below $1,850.


Higher-than-anticipated monthly CPI fueled concerns that the Federal Reserve may resume its aggressive stance on U.S. interest rates, just when the central bank appeared to be easing up on monetary tightening.


Sunil Kumar Dixit, chief technical strategist at SKCharts.com, stated that the $1,830 level needed to be maintained for the spot price of gold to return to near the $1,870 level. Gold's charts indicate that the $1,830 level was crucial for the spot price of gold to recover to near the $1,870 level.


"Sustainability below $1,878, or the 23.6% Fibonacci level of retracement measured from the low of 1,616 to the high of 1,960, has led to the continuation of the correction in spot gold into the next leg down of $1,828," said Dixit.


"A rebound to 1,860 followed by 1,868 cannot be ruled out if prices fail to fall below $1,830 in a sustainable manner."


However, Dixit erred on the side of caution, stating that a break of that support was likely if U.S. inflation fears continued to rise, hence boosting the Dollar Index and U.S. 10-year Treasury note yields, gold's twin adversaries.


"If 1,828 is clearly broken with a weekly closure, spot gold might fall to $1,788, or the 50% Fibonacci level," he continued.


Unfortunately, gold bulls are caught in the crosshairs of the central bank's war on inflation. Every dollar and Treasury yield increase has become a chance to sell gold.


Historically, gold prices rose with inflation as investors purchased the metal as a "hedge" or store of value against the currency, which normally loses value when the cost of goods and services increases. This was during typical times when strong economic news was good for risk assets.


Now, good economic news — particularly about U.S. jobs and pay — is bad because it has the potential to increase inflation, causing the Federal Reserve to increase interest rates and harming everything from equities to gold and oil. Thus, the positive correlation between gold and inflation has broken down and is predicted to continue until the Fed pays less attention to interest rates.


In the previous year, the Fed has boosted interest rates by 450 basis points, bringing them to a peak of 4.75 percent from 0.25 percent after the COVID-19 outbreak in March 2020. As annual inflation reached four-decade highs, the central bank began with a modest 25 basis point increase in March 2022, increasing it to 50 basis points the following month before starting on four massive 75 basis point increases between June and November of last year. Subsequently, the Fed moderated the pace of monetary tightening, returning to a 50-basis-point boost in December and a 25-basis-point hike this month.