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On June 18th, Chaos Tiancheng Futures reported that the Federal Reserves June interest rate meeting caused significant market volatility. The overall meeting and statement clearly shifted towards a hawkish stance, while Warshs relatively neutral remarks exacerbated market fluctuations. Subsequently, US President Trump stated that the Fed would maintain interest rates unchanged, which was fine. (Regarding the possibility of a Fed rate hike) This could happen. After the meeting, market expectations for a rate hike rose, and the US dollar index surged, surpassing the 100 mark. Currently, for precious metals, although the meeting showed a hawkish bias and rate hike expectations rose, the market was relatively prepared and anticipated. The decline was completed in the short term, but this mornings news of the US-Iran memorandum led to a recovery of half of the decline, effectively ending short-term trading opportunities. Further developments still require observation of the driving forces, most importantly geopolitical tensions. Given the current increased market volatility, there are no clear trend conditions. (This content and opinion are for reference only and do not constitute any investment advice.)The Federal Reserve kept its policy rate unchanged but predicted a rate hike this year. A chart provides a quick overview of the pre-market gold and silver prices, converted between domestic and international markets.On June 18th, a research report from CICC stated that the Federal Reserve maintained interest rates unchanged at its June meeting, in line with market expectations. The biggest change at this meeting was the reform. The monetary policy statement was significantly simplified, and forward guidance was removed, aiming to reduce the Feds intervention in the market. More importantly, five working groups were established: communication, balance sheet, data, productivity and employment, and an inflation framework. This reshapes the policy framework from fundamental principles, laying the institutional groundwork for Warshs conservative and market-oriented policy approach. The balance sheet assessment was ranked second, indicating that balance sheet reduction remains a core inclination. Regarding policy this year, Warsh did not provide clear guidance, but the dot plot clearly turned hawkish: the average forecast predicts one rate hike this year, reflecting that with stable employment and high inflation, combating inflation has become the focus. We maintain our judgment that the Fed will neither raise nor lower interest rates this year, but note the increased risk of a rate hike next year. If the US economy continues to strengthen and achieve a full recovery driven by AI capital expenditure, the possibility of monetary tightening cannot be ruled out.According to The Information, Google DeepMind researcher Norm Shazel will be joining OpenAI.June 18th - According to NewsNation, Republican members of Congress have begun blaming Vice President Vance, accusing him of reaching a "bad" deal with Iran. One Republican congressman stated, "Conservatives in Congress are appalled that Vance reached such a terrible deal, erasing all of Trumps military victories. Trump had effectively won the war, and Vance lost it at the last minute through negotiations." Earlier today, President Trump joked, "If we reach a deal, the credit is mine; if we dont, blame Vance." Trump praised the agreement with Iran during his visit to France and signed a copy of the memorandum of understanding in Versailles. A source close to the White House responded to the congressmans comments, saying that the unnamed Republican congressman dared to be so audacious as to attempt to strip the president of his power in order to undermine and obstruct his peace agreement.

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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