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On September 6th, it was announced that the Ministry of Finance will soon issue 300 billion yuan in special treasury bonds to support eight central financial enterprises in replenishing their core tier-one capital. On the same day, the Industrial and Commercial Bank of China, Agricultural Bank of China, Export-Import Bank of China, China Export & Credit Insurance Corporation, PICC, China Life Insurance Company, China Taiping Insurance, and China Reinsurance Corporation announced their respective capital increase plans. Industry insiders stated that the Ministry of Finances capital increase for these eight central financial enterprises is a forward-looking arrangement, a proactive measure to support the high-quality development of central financial enterprises and contribute to the steady and sustainable development of the macroeconomy.On September 6, Iranian Armed Forces Chief of Staff Abdollah Abdullah stated that Iran will not surrender to the United States, and that the USs efforts to pressure Iran through "soft power warfare," cognitive warfare, and economic warfare have failed to force Iran to change its stance. Abdullah claimed that the US misjudged Irans potential surrender before taking military action, but this assumption "will not come true." He stated that the US is currently attempting to compensate for its strategic failures in the military field through "soft power warfare," cognitive warfare, and economic pressure, but these measures are also unsuccessful. Abdullah also stated that Iran "has demonstrated a new model of resistance to the world."Lebanese President: Despite the attacks, we remain firmly committed to upholding Lebanons sovereignty and stability in the south.Lebanese President: The attack on the Ministry of Finance building shows a persistent pattern of attacks, reflecting an intent to strike state institutions.Lebanese President: Israels attacks went beyond the scope of the ceasefire agreement and the framework agreement for national institutions.

Gold Price Prediction: XAU/USD recovers to $1,700; negative potential intact

Daniel Rogers

Sep 07, 2022 16:26

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Gold extends Tuesday's retreat from a weekly high and continues to lose ground through the first half of Wednesday's trading session. The XAU/USD falls further below $1,700 for the third consecutive trading day, but stops just above the monthly low reached last Thursday.

 

The persistent purchasing of U.S. dollars remains ongoing and is a crucial element imposing downward pressure on dollar-denominated gold. In fact, the USD Index, which measures the performance of the greenback against a basket of currencies, reaches a new 20-year high in anticipation of a more aggressive Fed policy tightening.

 

In fact, current market pricing shows a probability of greater than 70% that the Fed will increase interest rates by 75 basis points at its upcoming meeting on September 20-21. The bets were confirmed by Tuesday's positive US ISM Services PMI, which caused a sell-off in the US government debt market and pushed the 30-year bond yield to its highest level since 2014.

 

In addition, the yield on the benchmark 10-year US Treasury note rose to levels not observed since June 16. This, in turn, provides extra support for the greenback and also contributes to a shift away from non-yielding gold. However, the existing risk-averse sentiment helps prevent deeper losses for the safe-haven precious metal for the time being.

 

Fears of a recession have been fueled by the likelihood of rapid interest rate increases, as well as the economic headwinds resulting from new COVID-19 restrictions in China and the ongoing conflict in Ukraine. This continues to weigh on investor sentiment, as evidenced by the generally gloomier tone on equities markets, and supports conventional safe-haven investments.

 

The flight to safety aids gold's comeback to the $1,700 round-number mark, but further recovery remains elusive. In the absence of market-moving economic releases from the United States, Fed officials' remarks will play a significant role in determining the USD's price dynamics. This could create chances for short-term trading in the commodity.

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