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On April 26, according to the Wall Street Journal, in order to simplify the negotiations on reciprocal tariffs, US negotiating officials plan to use a new framework developed by the Office of the United States Trade Representative (USTR), which lists major categories of negotiations, such as tariffs and quotas, non-tariff trade barriers, digital trade, product origin principles, economic security and other commercial issues. In these categories, US officials will put forward specific requirements for individual countries, but people familiar with the matter emphasized that this document may also be adjusted at any time. People familiar with the matter said that the United States initial plan is to negotiate with 18 major trading partners in turn over the next two months. The initial plan is to alternately participate in the talks with six countries per week for three weeks (six countries in the first week, another six countries in the second week, and another six countries in the third week) until the deadline of July 8. If US President Trump does not extend the 90-day suspension period he set by then, those countries that cannot reach an agreement will begin to face reciprocal tariffs.On April 26, after the United States announced additional tariffs on goods from many countries, Peruvian business people expressed concerns that the US governments extreme measures would disrupt the global trade order and may even trigger a global economic recession. Alvaro Barrenechea Chavez, vice president of the Peruvian-Chinese Chamber of Commerce, said that the negative impact of the US tariff policy has begun to emerge and hoped that the US government would rethink. Recognizing the importance of countries working together to promote development, I think this is the best way to become a true "world citizen."Market news: Musks xAI company plans to raise about US$20 billion in a financing round.Conflict situation: 1. Ukrainian top commander: Russia tried to use air strikes as a cover to increase ground attacks, but was repelled by Ukraine. 2. Ukrainian Air Force: Russia launched more than 103 drones in the night attack on Ukraine. 3. Local officials said Ukraine launched an attack in the Belgorod region of Russia, killing two people. 4. The local governor said that Russia launched an attack on the Dnipropetrovsk region of Ukraine, killing one person and injuring eight people. Peace talks: 1. Trump: ① The situation between Russia and Ukraine is gradually becoming clear, and they are "very close" to reaching an agreement. ② Ukraine is unlikely to join NATO. ③ Ukraine has not yet signed the rare earth agreement and hopes that the agreement can be signed immediately. ④ It is foreseeable that the United States will conduct commercial cooperation with Ukraine and Russia after reaching an agreement. 2. Russian Foreign Minister: Russia is "ready to reach an agreement on Ukraine." 3. Russian Presidential Assistant Ushakov: Russia and the United States will continue to maintain active dialogue. 4. Russian Presidential Assistant: Putin discussed the possibility of resuming direct negotiations between Russia and Ukraine with the US envoy. 5. The differences between the United States, Europe and Ukraine are clear. The documents show that European countries and Ukraine have raised objections to some of the US proposals to end the Russia-Ukraine conflict. 6. Market news: As part of the peace agreement, the United States asked Russian President Putin to abandon the demilitarization requirement. Other situations: 1. President of Hungarys OTP Bank: We hope to return to all business areas in Russia after the (Russia-Ukraine) conflict ends. 2. Ukrainian President Zelensky: US ground forces are not necessary for Ukraine. 3. Trump said Crimea will remain in Russia, Zelensky: Never recognize it. Agreeing with Trumps view, Crimea cannot be recovered by force. 4. NATO Secretary-General Rutte met with Trump and senior US officials to discuss defense spending, NATO summit, and the Ukrainian conflict.Rising global trade risks, overall policy uncertainty and the sustainability of U.S. debt top the list of potential risks to the U.S. financial system, according to the Federal Reserves latest financial stability report released on Friday. This is the first time the Fed has conducted a semi-annual survey on financial risks since Trump returned to the White House. 73% of respondents said that global trade risks are their biggest concern, more than double the proportion reported in November. Half of the respondents believe that overall policy uncertainty is the most worrying issue, an increase from the same period last year. The survey also found that issues related to recent market turmoil have received more attention, with 27% of respondents worried about the functioning of the U.S. Treasury market, up from 17% last fall. Foreign withdrawals from U.S. assets and the value of the dollar have also risen on the list of concerns.

Gold Price Prediction XAUUSD - Lower as Investors Seek Additional Clarity from the Federal Reserve

Alina Haynes

Nov 21, 2022 11:44

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After reaching its highest level in three months on Wednesday, gold futures declined on Friday and for the week. As hawkish Federal Reserve officials predicted additional interest rate hikes, investors began booking profits.

 

On Friday, Comex gold futures for February settled at $1769.00, a decrease of $8.80 or 0.50%. The United States Oil Fund ETF (USO) closed at $69.04, down 1.10 points, or 1.57 percent.

 

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Fed Members Generate Uncertainty, Which Encourages Profit-Taking 

In response to a U.S. Non-Farm Payrolls data that indicated an unexpected uptick in the unemployment rate, gold futures have risen by over $100 this month since bottoming in the first week of November. The Fed's streak of 75 basis point rate hikes could come to an end if it decides to raise rates by 50 basis points in December, as a result of the unexpectedly low inflation report.

 

As hawkish comments from many Fed officials intensified last Wednesday, profit-takers began to enter the market. The central message from policymakers was that interest rates will rise.

 

In addition to reducing the rate of rate hikes from 75 basis points to 50 basis points, the Fed may also extend the duration of rate increases. This suggests that the terminal rate, or the rate at which the Fed finishes raising interest rates, could be significantly higher than anticipated.

 

The uncertainty regarding when the Fed will stop rising interest rates and how high they will be when they do is what encourages long speculations and drives prices lower. We are not observing the beginning of a trend reversal, but rather a "When in doubt, get out" mentality.

Bullard of the Fed Set the Bearish Tone 

Wednesday, as gold approached a three-month high, St. Louis Fed President James Bullard halted the rally with strong hawkish remarks.

 

Bullard stated that the Fed's target policy rate must increase to a range between 5.00% and 5.25% from its current level just below 4.00% in order to be "sufficiently restrictive" in containing inflation, though he would defer to Fed Chair Jerome Powell on how much higher to move rates in upcoming policy meetings.

Short-Term Prognosis

After reaching a high of $1791.80 last week, gold prices are currently dropping, with traders likely seeking a break into a value zone before re-entering the long side. Our goal zone is $1705.00 to $1684.60.

 

The market is expected to continue to be influenced by data, thus gold bulls will seek data that proves inflation is decreasing and the economy is faltering. This scenario will provide the Fed with more room to reduce its rate of tightening.

 

As Fed members stated, a single piece of data will not be sufficient to alter their hawkish tone. They want to see additional evidence that inflation is declining.