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Tesla (TSLA.O) is redesigning the electric door locking mechanism.On September 18th, the Federal Reserves first interest rate cut in nine months triggered a rally in U.S. Treasury bonds, fueling market expectations that the Fed would initiate a series of aggressive rate cuts to support the economy. However, Fed Chairman Powell stated that Wednesdays rate cut was a risk management decision, arguing that a rapid adjustment of interest rates was unnecessary and that the Fed would make decisions on a meeting-by-meeting basis. This cautious statement dampened market hopes for a significant rate cut, sending U.S. Treasury bonds lower and yields higher. Gennadiy Goldberg, head of U.S. interest rate strategy at TD Securities, noted that Powells reluctance to express an overly dovish stance influenced interest rate movements, particularly as he framed the rate cut as an "insurance" measure.On September 18th, after the Federal Reserve made its interest rate decision, the "new bond king" Gundlach talked about the price of gold, which broke through $3,700 today. Gundlach pointed out that the price of gold has risen by more than 100% in the past two years and has risen by 45% so far this year. He called this trend "outrageous." Gundlach said: "Now even gold miners are participating, which shows that retail investors are beginning to join the momentum trading in the gold market." Gundlach pointed out that he has always been bullish on gold and predicted that the price of gold would reach $4,000 earlier this year. Today, he went a step further and expected the price of gold to rise by another $340 from the current level, an increase of about 9.2%. He said: "I think that by the end of this year, the price of gold will almost certainly close above $4,000.""New Bond King" Gundlach: As the next Federal Reserve chairman approaches, I think we will almost be in a situation of negative real interest rates."New Bond King" Gundlach: If long-term government bond interest rates are too high, yield curve control may be implemented.

Gold Falls Below $1,800 As Further Fed Concerns Arise

Charlie Brooks

Dec 06, 2022 11:36

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Stronger-than-expected U.S. data boosted the dollar and heightened worry about the U.S. economy and the Fed's response.


The dollar rose for the first time in four sessions on Monday, rebounding from a five-month low. U.S. factory orders and services sector data showed better-than-expected economic performance, which might fuel inflation.


This could require the Fed to hike rates longer than expected, especially if inflation remains high. The Fed has forecast slower rate hikes in the coming months but warned rates may peak higher than expected.


Such a circumstance would hurt most non-yielding assets, especially gold. Next week is the Fed's final 2022 meeting.


Spot gold was near $1,769.30 per ounce, and gold futures were at $1,781.55 per ounce. Monday was the worst day for both instruments in three months, falling 1.7%.


Rising interest rates pushed gold prices lower this year as higher debt yields increased the potential cost of holding gold. Despite rebounding from early-year lows, gold's prospects are limited by the volatility of U.S. interest rates.


After a dramatic drop Monday, other precious metals remained quiet Tuesday. Platinum fell 0.1%, while silver futures stayed at $22.422 per ounce. Monday, both metals fell 2.4% and 4.4%.


Copper prices reversed Monday's early gains as rising interest rates overshadowed optimism about Chinese demand.


Copper futures were steady after sliding 2% the day before.


Despite gold's spectacular comeback in the past two weeks due to rising optimism about China's anti-COVID actions, the recovery looks to have been cut short by concerns that higher interest rates may further hinder economic activity.


China hasn't said it will cut back its entire zero-COVID program; so far, it's simply reduced some steps in its largest cities.


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