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On December 12th, Cleveland Federal Reserve President Hamak stated that she prefers a slightly tighter interest rate stance to continue putting pressure on inflation, which remains excessively high. "Our policy is currently broadly neutral," Hamak said on Friday. "I would prefer a slightly tighter stance to help continue putting pressure on inflation." Hamak does not have a vote this year but will gain voting rights in 2026. When asked if she supported this weeks rate cut decision, she did not answer directly, only stating that it was a "complex decision" because policymakers are facing dual pressures from a dual mandate. Hamak also said she expects key inflation and employment data to be released in the coming weeks to help policymakers better understand the economic outlook. She also pointed out that the Fed lacks appropriate tools to address structural changes in the economy.Both WTI and Brent crude oil prices fell in the short term, with intraday declines widening to 1%, currently trading at $57.13/barrel and $61.27/barrel respectively.Market news: Switzerland has adopted the EUs sanctions plan against Russia and Belarus.Bank of America raised its target price for Broadcom (AVGO.O) from $460 to $500.On December 12th, Goldman Sachs predicted continued market strength in 2026 and set a target of 7,600 points for the S&P 500. Ben Snider, Goldman Sachs chief U.S. equity strategist, stated that AI-driven productivity will boost earnings, expecting S&P 500 earnings per share (EPS) to grow 12% to $305, with six major technology companies contributing nearly half of the growth. While large technology companies remain the primary driver, Snider also anticipates improved earnings for other components of the index. He noted that risks ahead include a slowdown in the Federal Reserves easing pace and pressure on profit margins, but he maintains an overall positive outlook.

Gold Price Prediction: XAU/USD clings to 29-month low near $1,650; Ukraine, Fed's Powell in spotlight

Daniel Rogers

Sep 26, 2022 12:01

Gold price (XAU/USD) licks its wounds around a two-year bottom, at $1,645 during Monday's Asian session, as bears take a breather following the week's largest daily decline ahead of important catalysts. The contradictory news regarding Europe and Russia may further put pressure on metal prices. Despite this, bears remain optimistic despite the widespread rush to endanger safety.

 

Germany's ability to secure a gas contract with Abu Dhabi, as well as Russia's lack of rapid response to Group of Seven (G7) chatter about mustering guts against Moscow, indicated a correction in mood. Recently, a holiday in New Zealand and a light calendar in Asia allowed the XAU/USD bears to catch their breath.

 

During the past week, the gold price was pushed down by high US PMIs, weak activity data from the bloc, Russia's stern warning to the West, and the Group of Seven's (G7) readiness to respond with penalties. In addition, the XAU/USD was pulled down by hawkish central bankers and fears of recession.

 

Nonetheless, the initial readings of the S&P Global PMI for the month of September indicated that the European economy contracted significantly, hampered by rising energy prices. The German Services PMI reached its lowest level in two years, while its European counterpart reached its lowest level in 19 months. In addition, Manufacturing PMIs reached their lowest level in twenty months. In September, the US S&P Global Manufacturing PMI increased to 51.8 from 51.5, and the US S&P Global Services PMI improved from 44.6 to 49.0.

 

Jerome Powell, chairman of the Federal Reserve, stated elsewhere on Friday, "We are committed to deploying our tools." Following him, Fed Vice Chair Lael Brainard stated that 'hard' inflation is impacting low-income people. Raphael Bostic, president of the Atlanta Federal Reserve, told CBS' "Face the Nation" over the weekend that he still believes the central bank can reduce inflation without substantial job losses, given the economy's sustained pace, as reported by Reuters, citing the Fed official's interview.

 

According to a recent CBS interview, Ukraine's president Zelenskiy stated that "Putin's nuclear threats may have been a bluff, but now they might become a reality." The United States, meanwhile, warned of "catastrophic repercussions" if Moscow used nuclear weapons in Ukraine, after Russia's foreign minister stated that territories hosting heavily condemned referendums would receive full security if annexed by Moscow.

 

Wall Street closed in the red, US Treasury yields increased, and the US Dollar Index (DXY) reached a new multi-year high against this backdrop. Consequently, S&P 500 Futures record modest losses at the latest.

 

Intraday movements will be heavily influenced by Italy's election results and a statement by European Central Bank (ECB) President Christine Lagarde. Nonetheless, the week will be dominated by the Ukraine-Russia conflict, comments from Fed Chair Powell, and US Durable Goods Orders for direction.


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