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JPMorgan Chase: The Federal Reserve is expected to raise interest rates by 25 basis points in December 2026, compared with previous forecasts that interest rates would remain unchanged this year.July 30th - On Thursday, demand at the auction of Japanese two-year government bonds was lower than the 12-month average, as the market widely anticipated a tightening of monetary policy by the Bank of Japan. The subscription multiple was 3.63, compared to 4.82 at the previous auction, and the 12-month average is 3.81. Another sign of weak investor interest was the tail spread (the difference between the average bid and the minimum acceptable bid) at 0.007, compared to 0.005 last month. Recently, yields on short-term Japanese government bonds, which are more sensitive to monetary policy, have risen due to increased oil prices caused by tensions in the Middle East and heightened concerns about fuel inflation. The two-year yield has now risen to 1.47%, close to the high of 1.52% reached earlier this month. This further increases pressure on the Bank of Japan to raise interest rates.On July 30th, according to foreign media reports, Malaysian palm oil futures fell slightly on Thursday, marking their third decline in four trading days, mainly dragged down by weaker prices of competing edible oils and crude oil. The benchmark October palm oil contract on the Bursa Malaysia Derivatives Exchange fell 16 ringgit, or 0.34%, to 4,648 ringgit per tonne (approximately US$1,137.82) in early trading. Despite escalating tensions in the Middle East and the US-Iran conflict spreading beyond major fronts, oil tankers continued to leave the region, causing oil prices to give back some of their gains. Weaker crude oil futures reduced the attractiveness of palm oil as a biodiesel feedstock. The ringgit strengthened slightly by 0.07% against the US dollar, making it slightly more expensive for buyers holding foreign currency to purchase the commodity. According to documents from the Indonesian Ministry of Energy, the country has increased its 2026 biodiesel quota using palm oil as a feedstock to 16.75 million kiloliters to meet the increased demand from the B50 biodiesel blending policy launched earlier this month.Shunichi Suzuki, Secretary-General of the Democratic Party of Japan: The goal is to submit a tax reduction bill during the autumn Diet session.The bid-to-cover ratio for Japans 2-year government bonds was 3.63, lower than the 4.82 achieved in the previous issuance in June.

Gold Price Prediction: XAU/USD bears at $1,650 on Fed hawkishness and China news

Daniel Rogers

Sep 19, 2022 14:34

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During early Monday morning in Europe, the gold price (XAU/USD) maintains a position close to the intraday low at $1,670. In doing so, metal prices endure the weight of a stronger U.S. dollar amidst a sluggish session caused by Japanese and British vacations. The cause may be related to the Fed's hawkish bets and China-related news stories.

 

US Dollar Index (DXY) reverses a two-day slump while posting intraday gains of 0.18 percent at 109.85 as of press time. Indicators of the U.S. dollar's value versus the six major currencies have recently been buoyed by the University of Michigan's September consumer sentiment report and the market's positive expectations on the Fed's next move. Consequently, the probability of a 75-basis-point (bps) rate hike by the Federal Reserve increased to 80%, while the market's estimates of a one-percentage-point increase in the Fed rate rose to 20% at the latest.

 

US President Biden stated elsewhere, "I'm more positive than I've been in a long time." The national leader also claimed that inflation will be brought under control. On the same line are the covid updates from China, which have unlocked Dalian and Chengdu while observing zero coronavirus cases in Beijing and one, as opposed to zero the day before, outside of Shanghai's quarantine zone. However, US President Biden's willingness to support Taiwan in the event that China assaults Taiwan and hawkish expectations for the Federal Reserve appear to weigh on the steel price ahead of the major monetary policy pronouncements.

 

In addition, the People's Bank of China (PBOC) reduces the 14-day reverse repo rate by 10 basis points to 2.15 percent. "With no maturing reverse repos on Monday, the Chinese central bank injects 12 billion yuan," reports Reuters. The same might have indicated that the dragon nation is not in recovery mode and requires more rate cuts than rate raises, which could have caused the gold price to plummet. The cause is China's position as one of the world's largest gold consumers.

 

In light of this, the S&P 500 Futures post modest losses while mirroring Wall Street's Friday close. Notably, the selling in Japan curbs bond movements in Asia, but yields are robust near the multi-day high due to fears of a recession and hawkish Fed views.

 

Moving forward, a light economic calendar and important market holidays may limit intraday XAU/USD price fluctuations. However, bears are expected to maintain control because to aggressive Fed expectations, which, if dashed, might defy the bearish chart pattern and spark the long-awaited rally.

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