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European Central Bank officials expect to further tighten policy in October.On September 10th, the Trump administration announced it would send $500 to nearly one million Americans, arguing that those who purchased health insurance through the federal Affordable Care Act (ACA) marketplace were being "overcharged." The White House said Thursday that the checks are expected to mail out in October, just before the midterm elections that will determine control of Congress. Widespread disapproval of Trumps handling of the cost of living has hampered Republican candidates in key districts nationwide. The White House stated that the payments related to Obamacare were due to a "significant cash surplus" accumulated during the Biden administration, accusing the Biden administration of charging "excessive" user fees to those using the federal marketplace in the form of "higher premiums." Nevertheless, these payments—which the White House describes as costing nearly $500 million—could exacerbate ongoing concerns about inflation and the nations escalating budget deficit and public debt. Trump has long attempted to repeal Obamacares landmark law but has failed. In addition, he has proposed directly subsidizing Americans insurance purchases instead of paying health insurance companies.The French National Institute of Statistics and Economic Studies (INSEE) projects that French HICP inflation will rise to 3.1% in December from 2.7% in August. The INSEE also projects French economic growth of 0.4% in 2026, lower than the 0.7% forecast in June.The International Monetary Fund (IMF) states that India remains a global economic growth engine and is closely monitoring the impact of high oil prices on India.1. EIA Natural Gas Report: As of the week ending September 4, total U.S. natural gas inventories stood at 3.254 trillion cubic feet, an increase of 40 billion cubic feet from the previous week, but a decrease of 79 billion cubic feet from the same period last year, a year-on-year decrease of 2.4%. This is 148 billion cubic feet higher than the 5-year average, an increase of 4.8%. 2. Houthi Spokesperson in Yemen: Freedom of navigation and international trade in the Red Sea and the Bab el-Mandeb Strait remain safe and unimpeded. 3. This week, Mysteels Coal and Coke Division surveyed the profitability of independent coking plants nationwide. The national average profit per ton of coke was -17 yuan/ton; the average profit for first-grade coke in Shanxi was 43 yuan/ton, in Shandong it was 15 yuan/ton, in Inner Mongolia it was 3 yuan/ton, and in Hebei it was 64 yuan/ton. 4. The U.S. Climate Prediction Center stated that the strong El Niño this year, which is already disrupting global weather patterns, has a 75% probability of becoming a "historic event," surpassing all records since 1950. The center stated in an update on Thursday that El Niño is likely to continue strengthening until the end of the year. However, the stronger it becomes, the more likely it is to affect global weather in a predictable way. 6. Data released by the U.S. Department of Agriculture (USDA) shows that private exporters reported sales of 272,000 tons of soybeans to China and 206,500 tons to unknown destinations, all for delivery in the 2026/2027 marketing year. 7. Data shows that the U.S. August PPI annual rate was 2.4%, higher than the market expectation of 5.3%, while the August core PPI monthly rate was 0.2%, lower than the market expectation of 0.3%, releasing mixed signals as Federal Reserve officials debated whether to raise interest rates next week. After the PPI data release, the market fully anticipated a Fed rate hike in October. 8. OPECs monthly report shows that OPEC lowered its 2026 global oil demand growth forecast to 380,000 barrels per day, marking the fifth consecutive downward revision. However, the OPEC organization still believes that the impact on consumption since the outbreak of the war with Iran has been less than that of other forecasting agencies such as the International Energy Agency, which predicts that demand will decline in 2026.

Forecast for the Gold Price: XAU/USD bulls require confirmation from $1,902 and US inflation projections

Daniel Rogers

Jan 13, 2023 14:48

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Gold price (XAU/USD) is stable at $1,900 as bulls take a breather near the eight-month high early Friday morning, following the US inflation-inspired advance. In doing so, gold also reflects the market's skepticism ahead of additional data on US inflation conditions and consumer morale. In addition, recent concerns regarding US-China relations present additional obstacles for XAU/USD buyers.

 

According to anonymous sources cited by Reuters, the White House will discuss the recent ban on exports of chip-making gear to China during planned trips with Japanese and Dutch officials. The story also mentions that the White House Officials will not result in "immediate" commitments from China and Russia to implement comparable restrictions. The news renews the geopolitical conflict between the United States and China and supports the price of gold.

 

In a similar vein, the atmosphere before to China's trade data for December and the initial readings of the US Michigan Consumer Sentiment Index (CSI) for January will be crucial for short-term direction. In addition, the US 5-year Consumer Inflation Expectations will be crucial.

 

Even though Wall Street closed with gains, S&P 500 Futures remain hesitant and 10-year US Treasury rates lick their wounds near 3.46 percent as of press time.

 

On Thursday, the US CPI matched predictions for December at 6.5% YoY, compared to 7.1% before. Moreover, CPI excluding food and energy confirmed the market consensus of 5.7% YoY, compared to previous readings of 6.0%. Notable is the fact that the CPI MoM marked its first negative result since June 2020 with a -0.1% figure for the specified month, compared to the 0.0% anticipated and 0.1% prior figure.

 

Following the release of the US CPI, the Fed Fund Futures pegged to the policy rate implied a nearly 100 percent possibility of a 0.25 basis point (bps) Fed rate hike in February, but the odds favoring a 50 basis point (bps) rate hike in the same month fell to 8.0%.

 

Patrick Harker, president of the Federal Reserve Bank of Philadelphia, was the first to signal easy rate hikes after the US CPI, which weighed on the US Dollar. Thomas Barkin, president of the Federal Reserve Bank of Richmond, stated in the same vein that it "makes sense" for the Fed to steer more cautiously in its efforts to reduce inflation. However, the president of the Federal Reserve Bank of St. Louis, James Bullard, stated that the most likely scenario is for inflation to remain above 2%, therefore the policy rate will need to be elevated for a longer period of time.

 

In the future, expected growth in China's trade reports for December should benefit gold purchasers, while expected improvement in US consumer confidence measures could test the XAU/upward USD's potential. Notably, the US 5-year Consumer Inflation Expectations will be essential to monitor.


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