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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.

Forecast for the price of gold: XAU/USD recovery aims toward $1,800 as US inflation prospects test Fed hawks

Daniel Rogers

Dec 06, 2022 14:57

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The price of gold (XAU/USD) is still rising, hovering around $1,778 as the US dollar battles to maintain its week-start gain on early Tuesday. In addition to the movements of the dollar, technical analysis supports bullion buyers in maintaining control even as markets contract prior to the Federal Reserve's policymakers going dark.

 

On Monday, the US ISM Services PMI increased to 56.5 in November from 53.1 in the market expectation and 54.4 in the prior readings, while Factory Orders likewise showed 1.0% growth vs 0.7% predicted and 0.3% in the prior readings. Additionally, the S&P Global Composite PMI increased to 46.4 from 46.3 initial estimates, while the corresponding figure for services increased to 46.2 from 46.1 flash expectations.

 

On Friday, the US Nonfarm Payrolls (NFP) surprised markets by increasing to 263K instead of the 200K predicted and the 284K previously reported, although the unemployment rate for November was in line with market expectations and previous readings at 3.7%. Charles Evans, president of the Chicago Federal Reserve, commented after the positive report that "we are probably going to have a slightly higher peak to Fed policy rate even as we moderate pace of rate hikes."

 

However, it should be noted that a surprise decline in US inflation expectations from a one-month high, as measured by the 10-year and 5-year breakeven inflation rates, according to data from the St. Louis Federal Reserve (FRED), calls into question the recent hawkish bias regarding the US Federal Reserve's (Fed) next move. The most recent estimates of inflation forecasts for the next five and ten years show a decline from the one-month peak to 2.46% and 2.39%, respectively.

 

In other places, the market's optimism appeared to have been aided by expectations that China will soon relax its rigorous Zero-COVID policy. According to Reuters, an anonymous source, China is expected to announce a further reduction of some of the world's strictest COVID regulations as early as Wednesday.

 

A three-day slump is broken by the S&P 500 Futures, which record intraday gains of 0.20 percent around 4,011. However, the US 10-year Treasury note yields have fallen three basis points (bps) to 3.56% as of press time, following a rally from an 11-week low established last Friday.

 

Moving on, Gold may continue to recover despite what is likely to be a slow day, although concerns about China and the Fed seem crucial for short-term trends.


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