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Hang Seng Index futures closed up 1.25% at 19,841 points in the night session, 257 points higher than the previous session.Congressional Budget Office (CBO): The cost of clean energy subsidies in the inflation-proof bill is now expected to be $825 billion between 2025 and 2035, compared with an estimated cost of $270 billion between 2022 and 2031.The Federal Reserve accepted a total of $118.327 billion from 32 counterparties in fixed-rate reverse repurchase operations.The Federal Aviation Administration (FAA) said it was working with SpaceX and relevant authorities to confirm reports of damage to public property in the Turks and Caicos Islands.Futures traders are adjusting their bets in the Treasury market after mild inflation data and dovish comments from a Federal Reserve official. Over the past two days, the volume of open interest has changed, consistent with traders exiting short positions in two-year Treasury bonds and establishing new long positions in longer-term Treasury contracts, especially in the five-year Treasury. The shift came after consumer price inflation data released on Wednesday and comments made by Federal Reserve Governor Christopher Waller the next day. Data released on Wednesday showed that core price increases in December were lower than economists expected; Waller said that if the trend continues, officials may cut interest rates again in the middle of the year. Morgan Stanleys interest rate strategists suggested late Thursday that long positions could be established in Treasury bonds of this term given expectations that the Federal Reserve will cut interest rates in March, but this is still a minority view. The swap market expects only a 6 basis point rate cut in March, which means there is about a 25% chance of a 25 basis point cut. “We haven’t ruled out a rate cut in March, but we do see it as more of a tail risk,” said Stephanie LaRosiliere, head of fixed income strategy at Invesco. “It doesn’t feel like the Fed needs to react so hastily.”

Forecast for Gold Price: XAU/USD pares daily loss over 200-HMA as risk aversion subsides

Alina Haynes

Dec 08, 2022 15:04

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Gold price (XAU/USD) recovers to $1,785 during the first hour of Thursday's Asian session as market participants lick their wounds following a poor opening.

 

The most recent relaxation of the risk-averse sentiment, which originally helped the US Dollar prepare for weekly gains, may be related to news from China. Recently, Shanghai City Authorities announced that as of this Friday, they will no longer require Covid test checks at restaurants and entertainment venues. On the same line, the South China Morning Post (SCMP) reports that Hong Kong will "relax isolation regulations" for infected tourists on the fifth day after their release.

 

Even still, economic slowdown fears and Russia's use of nuclear weapons in its confrontation with Ukraine appeared to weigh on the XAU/USD exchange rate. In addition, Bloomberg released information indicating increased friction between the United States and China as a result of the current measures the United States Congress is attempting to adopt, which in turn threatens the Gold purchasers. Bloomberg reports that the United States is preparing to enact legislation that will change its policy toward Taiwan and restrict the government's use of Chinese semiconductors, steps that are guaranteed to anger Beijing despite President Joe Biden's efforts to reduce tensions.

 

As a result of these moves, the S&P 500 Futures have recovered from the three-week low to approximately 3,935 as of press time. In addition, 10-year US Treasury rates remain passive near 3.45% while trimming yesterday's losses to levels not seen since early September.

 

Ahead of next week's Federal Open Market Committee (FOMC) meeting, the Gold price may experience a period of sluggish performance. Traders may be interested in today's weekly US Initial Jobless Claims as well as Friday's first prints of the Michigan Consumer Sentiment Index and 5-year Consumer Inflation Expectations.


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