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March 9th, investors will continue to ponder the impact of Germanys massive fiscal stimulus plan and the impact of Germanys planned increase in defense spending in the coming week. Germanys massive fiscal stimulus plan has led to a sharp rise in German government bond yields. Investors are particularly interested in how fiscal expansion will affect economic growth and inflation in Europe, and how this will affect the ECBs monetary policy. After the ECB cut its deposit rate by 25 basis points to 2.50% this week, Vanguard and Alliance Bernstein have already expected smaller rate cuts from the ECB. Vanguard currently expects only one more rate cut this year, while Alliance Bernsteins revised forecast for the ECBs policy rate at the end of 2025 is 2%, higher than the previous forecast of 1.75%.On March 9, local time on March 8, the Speaker of the U.S. House of Representatives, Mike Johnson, officially announced a temporary bill for government funding that will last until September 30, aiming to avoid a possible government shutdown on March 14. According to people familiar with the matter, Johnson hopes to vote on the 99-page bill on the 11th. U.S. President Trump posted on his social platform that day that all Republicans should vote in favor next week. Trump said that Democrats will do everything they can to "shut down the government" and they cannot let this happen.March 9th news: On March 9th, Tesla CEO Elon Musk reposted a post about Teslas driverless taxi (Cybercab) on the social platform X, and the post mentioned: "Tesla Cybercab was autonomously cruising around the Texas Super Factory today. I cant wait for the day when these cars are all over public roads." The video shows a golden Tesla Cybercab.Hamas said its delegation met with the Egyptian intelligence chief in Cairo to discuss a ceasefire in Gaza.March 9th news: On March 8th local time, US President Trump posted on his social platform "Real Social" to deny reports that US Secretary of State Rubio and Elon Musk had a conflict over massive cuts in government spending. Trump said that Musk and Rubio have a "good relationship" and any reports other than this are fake news.

Forecast for the price of gold: Pre-NFP trade slowdown around $1,790 according to XAU/USD

Alina Haynes

Aug 05, 2022 15:08

 截屏2022-08-04 下午5.25.46_1024x576.png

 

As traders exhibit the normal concern ahead of the important US employment data on Friday, the price of gold (XAU/USD) seesaws near the monthly peak. Despite this, the price of yellow metal fluctuates between $1,788 and $1,791 as of the morning of the press in Europe.

 

The market's conflicting fears about the global recession and the most recent geopolitical stories affecting Taiwan, in addition to the pre-NFP caution, further contribute to the XAU/USD's movement. It's important to note that the options market sends conflicting signals and presents difficulties for gold purchasers.

 

The recent increase in US Treasury rates has helped to strengthen the US currency and put downward pressure on the price of gold, but it also seems to have lessened concerns about a global economic downturn.

 

The US Dollar Index (DXY) reverses a two-day slump and registers modest gains at 106.00. The dollar index declined during the previous two days before consolidating recent losses by monitoring the yields. It's important to note that after falling during the previous two days, the US 10-year Treasury rates have stabilized at roughly 2.069 percent. The disparity between the coupons for 10-year and 2-year bonds is still the largest it has been since 2000, yet US Treasury rates have continued to show the possibility of a recession.

 

Geopolitical issues from the Taiwan Strait are also a problem for gold purchasers elsewhere, as China expresses its displeasure with Nancy Pelosi, the speaker of the US House of Representatives, visiting Taipei. According to West Official, US Secretary of State Antony Blinken recently stated at an East Asia meeting that China's response to US House Speaker Nancy Pelosi's visit to Taiwan had been "flagrantly aggressive."

 

In terms of the options market's attitude, a one-month risk reversal (RR) of gold prices ends a three-week downturn when seen weekly, but if observed daily, it causes a third straight day of decline. It should be mentioned that the risk reversal term refers to the spread between bullish and bearish bets, namely the call options and put options (RR).

 

In conclusion, gold prices are still stable, but the bad news outweighs the good news, therefore today's US employment data for July will be important for the short-term outlook. The US dollar's recovery may continue and impact on gold prices if the employment numbers look to be higher than expected.


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