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On October 25th, as the US government shutdown entered its 24th day, over 500,000 federal employees were unable to receive their full paychecks this week. The Senate is currently in recess, and the shutdown is expected to continue until next Monday. Due to significant disagreements between the Republican and Democratic parties on core issues such as health care and welfare spending, the Senate failed to pass a new temporary appropriations bill before the end of the previous fiscal year on September 30th. This resulted in the federal government running out of funds to maintain normal operations, leading to a shutdown on October 1st.On October 25, the Wall Street Journal reported that current and former U.S. Navy officials stated that the White House and senior Navy officials are in preliminary discussions about replacing the current warship fleet with an all-new "Golden Fleet." Trump has personally been involved in the plan. Navy officials have named the project "Golden Fleet," following in the footsteps of other similarly named Trump initiatives, such as the "Golden Dome" missile defense system and the "Golden Card" immigration program. The new fleet will include several large warships equipped with more powerful long-range missiles, as well as smaller vessels such as frigates. The next generation of warships could weigh 15,000 to 20,000 tons and be able to carry more and more powerful weapons, potentially even hypersonic missiles. Under the "Golden Fleet" concept, the Navy aims to move away from targeting a specific number of ships and focus on building a fleet of approximately 280 to 300 manned vessels, supplemented by a large number of unmanned vessels to fill gaps.CEO of Pemex: The company needs to make up for the loss of 30,000 barrels of crude oil per month to maintain stable production.The Federal Reserve will disclose stress test models and scenarios for the first time under the new proposal and solicit feedback. Fed Governor William Barr opposed the proposed changes, warning they would weaken the tests and reduce bank capital. Fed Governor John Bowman said the changes would help improve banks capital planning.Intercontinental Exchange: In the week ending October 21, diesel speculators cut their net long positions by 11,375 contracts to 45,766; Brent crude oil speculators cut their net long positions by 57,085 contracts to 52,521.

Gold Price Forecast: XAU/USD maintains rises above $1,900; downside appears bolstered by robust yields

Alina Haynes

Jan 18, 2023 14:56

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During the Asian session, the gold price (XAU/USD) exhibits a sideways auction profile above the round-level support of $1,900.00. The precious metal is able to maintain a price above $1,900.00. Tom Barkin, president of the Richmond Federal Reserve (Fed) Bank, made hawkish remarks that boosted US Treasury yields. However, the downside appears to be supported by the rising yields.

 

According to Fed officials, the economy has passed the inflation peak, but we are still far from the Consumer Price Index median (CPI). Therefore, a premature retreat from interest rate hikes is undesirable. 

 

Meanwhile, market volatility is increasing as risk-perceived assets lose traction. Futures on the S&P 500 have accelerated their losses, indicating that the risk-aversion theme is gaining traction. A drop in market participants' risk appetite has impacted the demand for US government bonds. This has caused 10-year US Treasury yields to rise above 3.54 percent.

 

In the future, investors will pay close attention to the United States Producer Price Index (PPI) (December) and monthly Retail Sales (December) statistics. According to estimates, the headline PPI (Dec) is anticipated to decline to 6.8%, while the core PPI is anticipated to decline to 5.9%. In addition, monthly Retail Sales statistics may indicate a 0.1% growth as opposed to the 0.6% decrease previously reported. A rise in Retail Sales statistics could increase the likelihood of a rebound in inflation estimates.


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