Mar 16, 2023 14:00
After reaching a new six-week high at $1,937.39, the gold price (XAU/USD) displayed a corrective move during the Asian session. As gold's allure is extremely strong amid growing concerns about the global banking crisis, a correction in the precious metal appears to be short-lived. Credit Suisse's debacle following the failure of Silicon Valley Bank (SVB) has triggered the risk of global financial instability, and uncertainty over the Federal Reserve's (Fed) upcoming interest rate decision has bolstered the case for the Gold price.
S&P500 futures have shown a recovery move following Wednesday's sell-off as investors assess the banking sector's uncertainty. However, the motif of risk aversion has not yet completely subsided.
During the Asian session, the US Dollar Index (DXY) is fluctuating in a narrow range of around 104.60. It appears that the impact of banking sector turmoil is maturing for the USD Index, and investors are beginning to discount expectations for next week's monetary policy. According to the CME FedWatch instrument, the probability that Fed chair Jerome Powell will raise interest rates by 25 basis points (bps) has risen above 70%. While 30% of the probabilities support maintaining the current interest rate policy.
Increasing odds of a status quo monetary policy are supported by a declining Consumer Price Index (CPI), a rising Unemployment Rate, sluggish Retail Sales, and a declining Producer Price Index (PPI).
Mar 17, 2023 13:44