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On August 17th, Futures News reported that the 7.7 magnitude earthquake on Flores Island, Indonesia, had a relatively small impact on the aluminum industry chain. In terms of production capacity distribution, bauxite, alumina, and the vast majority of electrolytic aluminum production capacity are concentrated in western Indonesia, generally more than 1400 kilometers from the epicenter. Even the nearest electrolytic aluminum plant—Huaqing Aluminum in Morowali, Sulawesi—is about 624 kilometers away, still outside the 300-kilometer damage radius. Coupled with the tsunami wave height of less than 0.4 meters, the actual supply impact was almost zero. In terms of prices, at most, there will be a short-term sentiment pulse of 0-1%, which is expected to be reversed within 1-3 days, without changing the medium-term trend.Japans preliminary annualized GDP deflator for the second quarter was 2.6%, compared to 3.20% in the previous quarter.Japans nominal GDP grew at a preliminary rate of 1.2% quarter-on-quarter in the second quarter, compared with 0.60% in the previous quarter.August 17th - Data from shipping intelligence firm Kpler shows that vessel traffic in the Strait of Hormuz decreased over the past weekend due to tanker attacks and stalled US-Iran negotiations. Five commodity ships passed through the strait on Saturday, while no ships passed through on Sunday, a significant decrease compared to the 31 ships that passed through the previous weekend.Japans second-quarter GDP growth rate for corporate spending was -1.2% quarter-on-quarter, compared to a forecast of 0.4% and a revised previous reading of -1% (from -0.70%).

Gold price forecast: The XAU/USD rebounds on reports of a lower US dollar and a return to risk-on

Daniel Rogers

Aug 12, 2022 11:51

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Gold recovers from an intraday drop to the $1,784–$1,783 range and reaches a new daily high during the early North American session. But bulls are having trouble capitalizing on the trend and pushing XAU/USD back above $1,800.

 

Gold prices in dollars is supported by the fact that the US dollar is having a hard time finding buyers and is still very close to its lowest level since late June. Investors cut their wagers on a 75 bps rate hike by the Federal Reserve at the September policy meeting after US consumer inflation data reported on Wednesday came in lower than expected. The dollar is further weakened, and the non-yielding yellow metal gains in value, as a result of this and a new leg down in US Treasury bond yields.

 

For the time being at least, the risk-on sentiment restrains additional advances for the safe-haven gold. Inflation fears persist, but there are some indicators that the rate of increase may have plateaued. This has led to calls for the US central bank to ease up on its policy tightening. This coming Thursday's announcement of the US Producer Price Index (PPI) will further reinforce market expectations and bolster investor confidence. The commodity is facing a headwind due to the robust performance of the equity markets.

 

Gold's potential gains could be limited by the fact that the Federal Reserve is widely predicted to raise interest rates by at least 50 basis points in September. To prepare for any additional appreciating rise, it would be advisable to wait for some follow-through buying beyond the $1,808 level, a five-week high set on Wednesday. However, the intraday rebound from the 50-day SMA's solid support floor favors optimistic traders and indicates that any significant retreat may still be considered as a buying opportunity.

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