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The European Central Bank stated that data released in the coming period will help it assess the impact of the Russia-Ukraine conflict on the inflation outlook and related risks.Market news: It is expected that Trump and Japanese Prime Minister Sanae Takaichi will announce that GE Vernova and Hitachi will build small modular nuclear reactors in Tennessee and Alabama.On March 19th, KPMGs Chief UK Economist, Yale Seflin, stated that the Bank of Englands decision to keep interest rates unchanged on Thursday came after investors expectations quickly shifted from a gradual decline this year to a possible rate hike. She indicated that for the central bank, the key lies in the severity of the secondary effects of the energy shock and whether these effects could reignite inflationary pressures. Therefore, the central bank may disregard more dovish signals in the labor market and the overall economy, focusing instead on potential price indicators in the coming months. However, despite this stance, a rate cut later this year is still possible, provided the impact of the energy shock begins to diminish and inflation falls as expected.Callum Pickering, chief economist at Perhunt: While Bank of England officials may privately still believe the next rate adjustment is more likely to be a cut than a hike due to uncertainty surrounding the timeline of the Iran war, it would be unwise to advocate for such an adjustment.On March 19th, Suren Thiru, an economist at the Institute of Chartered Accountants, stated that Bank of England policymakers should proceed cautiously and avoid raising interest rates too quickly in an attempt to correct past mistakes. Following the surge in energy prices caused by the Middle East conflict, the Bank of England unanimously voted to maintain interest rates. While the Bank of England hopes to avoid repeating the mistake of raising rates too late in 2022, this policy is more restrictive and inflation is lower, putting policymakers in a favorable position to address the current crisis. If the war in Iran ends quickly and soaring oil and gas prices lead to a significant increase in impending inflation, the possibility of another rate cut remains. However, the likelihood of further policy easing this year is rapidly decreasing.

Gold Price Prediction: XAU/USD Retraces to $1,800 Prior to US NFP

Alina Haynes

Dec 02, 2022 15:36

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Gold price (XAU/USD) replicates the traditional pre-NFP consolidation pattern as it falls from a four-month high to $1,780 on Friday morning. Consequently, the yellow metal records its first daily loss in four days amid cautious market conditions.

 

Amid sluggish trading hours, recent comments from International Monetary Fund (IMF) Managing Director Kristalina Georgieva seems to have weighed on the XAU/USD bulls in addition to the apprehension around the release of vital US job statistics. "Recession risks are rising for many countries, and the outlook for global growth is extraordinarily uncertain and dominated by risks," stated Georgieva of the IMF.

 

In addition, concerns regarding the deceleration of the Initial Public Offering (IPO) markets may have contributed to the Gold price decline. "A global slowdown in initial public offerings owing to increased market volatility and a regulatory cloud over fresh listings from China has produced pent-up demand that could lead to an IPO boom in 2023," according to industry experts speaking at the Reuters NEXT conference.

 

In addition, the recent comments from New York Fed's John Williams appeared to have tested US Dollar bears and helped Gold sellers, as the policymakers stated that the Fed has more rate hikes to implement.

 

S&P 500 Futures fall 0.30 percent intraday to 4,070, although US 10-year Treasury yields rebounded from a 10-week low to reach 3.53 percent as of press time.

 

Notably, the dovish fears regarding the US Federal Reserve's (Fed) next move, supported by the gloomy Fedspeak and softer US statistics, appear to keep gold bears optimistic ahead of the US jobs report. Forecasts indicate that headline Nonfarm Payrolls (NFP) will likely decrease to 200K from 261K previously, while the unemployment rate is projected to remain steady at 3.7%. It should be noted that a probable decrease in Average Hourly Earnings for the month in question could also weigh on the Gold price.

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