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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: XAU/USD treads water below $1,700 due to pre-Fed jitters

Alina Haynes

Sep 20, 2022 14:34

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During Tuesday's early European morning, the gold price (XAU/USD) trades near $1,676 as it attempts to preserve Friday's rebound from the two-year low. In doing so, the bullion reflects the market's uneasiness preceding significant central bank statements, as well as trade and geopolitical concerns emerging from Russia and China.

 

Fears that the US dollar has already priced in the Fed's 0.75 percentage point rate hike and that there is no more room for the greenback to appreciate have recently impacted on the US currency. There may be a connection between the dismal US housing data and inflationary expectations and the anxieties.

 

The US NAHB Housing Market Index decreased for the ninth straight month to 46, compared to 48 anticipated and 49 previously. In spite of this, US inflation expectations, as measured by the 10-year breakeven inflation rate according to the St. Louis Federal Reserve (FRED) statistics, fell for the third consecutive day to a two-month low near 2.34 percent by the end of the North American trading session on Monday. Moreover, according to FRED statistics, the 5-year breakeven inflation rate plummeted to its lowest level since September 2021, at 2.44 percent. Concerns were raised regarding the market's unexpected reaction to the Fed's hawkish wagers.

 

On the other hand, the European Commission's willingness to use emergency power to prevent a supply crisis seems to have combined with hawkish statements from European Central Bank (ECB) policymakers to support the XAU/USD upward via a weaker USD. In addition, the relative quiet surrounding the US-China conflict over Taiwan and China's covid unlocks is beneficial for metal prices.

 

Nonetheless, multi-day high yields and general forecasts of increased interest rates in the face of economic slowdown worries appear to put the gold price under pressure. In addition, the news that the holdings of the SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, fell to 30,799,131 ounces on Monday, the lowest level since March 2020, adds to the negative catalysts for XAU/USD traders.

 

However, the second-tier US housing data may provide timely guidance prior to the FOMC meeting on Wednesday. Given the Fed's heightened expectations, any disappointment will not be taken lightly and may offer the XAU/USD with the much-needed boost from its yearly low.


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