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June 7th - According to sources familiar with the matter, U.S. Treasury Secretary Bessenter instructed his team on June 6th to "assess the situation in Gulf allies and calculate the costs of repairing damage caused by Iran." The sources stated that the U.S. intends to utilize relevant mechanisms to transfer frozen Iranian assets to Gulf allies to fund their efforts to "address potential future damage from Iran and carry out reconstruction and repair work." The U.S. will also consider whether to use Iranian assets "to compensate for past losses."June 7th - As the conflict with Iran triggers global inflationary pressures, the European Central Bank (ECB) is expected to raise interest rates by 25 basis points next week, becoming the first major central bank among the G7 to tighten monetary policy. Markets anticipate at least one more rate hike this year. In contrast, the Bank of Canada is likely to keep its rates unchanged, while the Federal Reserve and the Bank of England are expected to remain on hold this month, observing the impact of the Iranian conflict. ECB officials aim to ensure that inflation in the Eurozone does not become deeply entrenched, but a rate hike would come at the cost of further dragging down an already weak economy. ECB President Christine Lagarde is likely to provide a clearer signal on the next steps at the press conference following the decision. Meanwhile, the ECB will also release its quarterly economic forecasts, assessing different scenarios of the energy shocks impact on the regional economy.On June 7th, Willie Walsh, Director General of the International Air Transport Association (IATA), stated that rising jet fuel prices are expected to lead to more airline bankruptcies and industry consolidation. He pointed out that a merger between United Airlines and American Airlines is unlikely due to regulatory hurdles. Walsh also stated that once the Middle East conflict subsides, airlines and hubs in the Gulf region will regain market share. Furthermore, despite disappointing progress in clean fuels, IATA remains committed to its 2050 net-zero emissions target.The Russian Ministry of Defense stated that its air defense forces intercepted 339 Ukrainian drones in multiple regions, including Moscow, within 13 hours.On June 7th, local time, the Russian Ministry of Defense stated on the 6th that Russian forces had seized control of the Shevchenko settlement in Kharkiv Oblast and struck 153 areas in Ukraine. These included production, storage, and launch sites for long-range drones; fuel, transportation, and port infrastructure; and temporary deployment points for Ukrainian armed forces and foreign mercenaries. The General Staff of the Ukrainian Armed Forces stated on the 6th that Ukrainian forces attacked targets including Russian personnel assembly areas, drone control points, and artillery systems.

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

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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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