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On April 26, UBS said that the current market thinking is consistent with the banks basic forecast, that is, tariffs will be reduced from the current announced level for the rest of the year, and the Federal Reserve will further cut interest rates this year. However, as uncertainty in trade, economy and Federal Reserve policy remains high, expected volatility also remains high. However, UBS believes that the US stock market is attractive, and the S&P 500 index target continues to be 5,800 points by the end of the year. UBSs current basic forecast is that the Federal Reserve will cut interest rates by 75 to 100 basis points this year, but in the short term, the Feds policy flexibility seems more limited because it must balance concerns about economic growth with the risk of inflation recovery.According to AFP: Senior officials said that Ukrainian President Zelensky and US President Trump may meet in Rome.Spokesman for Ukrainian President Volodymyr Zelensky: Ukrainian President Volodymyr Zelensky has arrived in Rome to attend the Popes funeral.According to the Ukrainian National News Agency: Russian troops launched 414 attacks in the Zaporizhia region at night.Market news: Ukrainian President Zelensky and his wife arrived in Rome.

XAUUSD is expected to stay under pressure due to expectations of 75 basis points from the Fed, according to ANZ

Daniel Rogers

Jul 18, 2022 12:01

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What main factors influence the price of gold? The yellow metal will be under pressure due to tighter monetary policy and an increase in the value of the US dollar. The demand for gold as a safe haven, however, may be supported by rising geopolitical risk and worries of a global recession, according to ANZ Bank experts.

 

"US inflation reached a 41-year high of 9.1% in June, but gold's role as an anti-inflation hedge was insufficient to allay worries about greater monetary tightening by central banks. Interest rates would increase to 2.25 percent by the end of July and 3 percent by the end of September if the Fed raises rates by 75 basis points over the course of the next two meetings. A trajectory this steep will be detrimental to gold price growth. This pessimism can be countered by the deteriorating economic prospects.

 

"The 2s/10s yield curve is now more inverted, which typically signals the beginning of a recession. Rising geopolitical uncertainties and a decline in asset prices may also be supportive. Additionally, the US dollar is probably going to weaken near the end of the year, which will help gold. We anticipate that the price of gold will bottom out around $1,700.


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