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On May 7th, oil prices plummeted on Thursday amid news of a potential peace agreement and the possible gradual reopening of the Strait of Hormuz. Both major benchmark crude futures had already plunged more than 7% on Wednesday, hitting two-week lows as market optimism fueled hopes for a possible end to the Middle East conflict. Priyanka Sachdwa, senior market analyst at Phillip Nova, stated that from a broader perspective, the oil market has been caught between diplomatic maneuvering and supply disruptions for over two months, with investor sentiment almost daily swayed by headlines. If a formal agreement is ultimately reached, oil prices could experience a freefall as the geopolitical premium quickly dissipates from the market. However, any new signs of attacks on oil infrastructure or escalation in the Middle East could easily trigger another surge in crude oil prices. Hiroyuki Kikukawa, chief strategist at Nippon Securities Investment, said that while peace negotiations may continue at least until next week, the outlook afterward remains uncertain.Snap (SNAP.N) fell 8.8% in pre-market trading as the Middle East conflict impacted advertising revenue and North American growth slowed.The Hang Seng Index closed up 412.5 points, or 1.57%, at 26,626.28 on Thursday, May 7; the Hang Seng Tech Index closed up 151.9 points, or 3.06%, at 5,121.1; the H-share Index closed up 118.73 points, or 1.35%, at 8,919.48; and the Red Chip Index closed up 29.37 points, or 0.65%, at 4,516.74.May 7th - Hopes for a US-Iran peace agreement persisted, causing oil prices to fall and the US dollar to weaken. An analyst at ANZ Bank Research stated, "The situation remains highly volatile, and intraday volatility is likely to remain high until more substantial progress is seen." Lloyd Chan, senior foreign exchange analyst at MUFG, said, "All indications continue to suggest that the parties have limited willingness to further escalate the situation in the Middle East." He added that with the US midterm elections approaching and gasoline prices soaring, the US government appears motivated to resolve the conflict.At the close of trading in Hong Kong stocks, the Hang Seng Index rose 1.57% and the Tech Index rose 3.06%. Techtronic Industries (00669.HK) rose more than 10%, Hua Hong Semiconductor (01347.HK) rose more than 8%, Kuaishou (01024.HK) and Chow Tai Fook (01929.HK) rose more than 7%, and Kingsoft (03888.HK) rose more than 6%.

Forecast for the price of gold: XAU/USD eases below the $1,804 barrier as Fed hawks back off due to weaker US inflation

Alina Haynes

Aug 11, 2022 11:58

 截屏2022-08-10 上午11.45.08_1024x576.png

 

US inflation-driven gains in the price of gold (XAU/USD) are fading as the metal declines to $1,790 on Thursday during the opening Tokyo session. The recent decline in the price of precious metals may be related to conflicting worries about the US Federal Reserve's (Fed) upcoming actions as well as Sino-American friction.

 

On Wednesday, the US Consumer Price Index (CPI) fell to 8.5% YoY in July, below the 8.7% consensus and the 9.1% reading from June. According to Reuters, US President Joe Biden stated on Wednesday that there are some indications that inflation may be decreasing after the US released its inflation data. In the coming months, there may be more challenges for us to overcome, Biden continued. US President Biden continues, "We still have work to do, but we're on track."

 

Following the CPI report on Wednesday, traders of futures linked to the Fed's benchmark interest rate reduced their bets on a third consecutive 75-basis-point raise at its policy meeting on September 20-21 and now see a half-point increase as the most likely scenario, according to Reuters.

 

Neel Kashkari, president of the Minneapolis Fed, recently stated that the Fed is "far, far away from declaring success" on inflation. Additionally, the decision-maker stated that he hasn't "seen anything that changes" the need for the Fed to raise its policy rate to 3.9% by year's end and to 4.4% by the end of 2023. Charles Evans, president of the Chicago Fed, said in another place that a recession would likely require unfavorable circumstances to occur. Also labeling inflation "unacceptably" high, Fed's Evans

 

Additionally, according to sources cited by Reuters, US President Biden is reconsidering his China tariff policy in light of Taiwan's response, which put the XAU/USD bulls on the defensive.

 

S&P 500 Futures print modest gains near 4,220 by press time against this backdrop after Wall Street rose and US Treasury yields were largely unchanged the day prior.

 

Moving on, the monthly Producer Price Index (PPI) for July and the weekly US Jobless Claims numbers may amuse gold traders. However, in light of recent risk-negative headlines, special focus should be placed on the qualitative variables.

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