EUR/USD 1.15582
0.137%
Gold 4142.17
-2.754%
Oil 87.975
0.714%
USD/JPY 160.411
0.030%
GBP/USD 1.34007
0.165%
GBP/JPY 214.967
0.197%
Browse More
  • English
  • 简体中文
  • 繁體中文
  • Tiếng Việt
  • ไทย
  • Indonesia
Subscribe
Real-time News
According to the Islamic Republic of Iran Broadcasting (IRIB), a Qatari delegation has arrived in Tehran to mediate the situation between the United States and Iran.June 10th - U.S. core CPI rose 0.2% month-over-month in May, below market expectations of 0.3%, causing U.S. Treasuries to strengthen slightly as bond traders maintained their bets on a Federal Reserve rate hike before the end of the year. The data was seen as easing some pressure on the Fed ahead of Kevin Warshs first meeting as Fed chair next week. Following the CPI release, most U.S. Treasury yields fell less than one basis point. The two-year Treasury yield, more sensitive to short-term monetary policy changes, was at 4.11%, down from around 4.13% earlier in the session. Dan Carter, senior portfolio manager at Fort Washington Investment Advisors, said, "This gives the Fed a little breathing room."June 10 - Goldman Sachs Asset Management strategist Tim Urbanowicz stated that while the recent surge in overall and core inflation is significant and poses headwinds to the economy and cyclical sectors, the driving force from the AI investment cycle, the potential benefits of the Beauty Act, and the lagged effects of the Federal Reserves rate cuts continue to provide strong support.June 10th - US May CPI data showed inflation surging to a three-year high, but a moderate rise in core prices eased Wall Streets concerns about interest rate hikes. Todays CPI data and tomorrows PPI index are expected to influence the Federal Reserves policy stance, which will be announced at the Fed meeting chaired by Warsh for the first time in a week. According to CME FedWatch, prior to the release of the CPI inflation data, the market had already priced in a 70% probability of a Fed rate hike by the end of 2026. However, the market believes that a rate hike at next weeks meeting is highly unlikely, with only a 13% probability of a rate hike at the July meeting. The short-term focus is on whether the Fed will clearly shift from an easing stance to a neutral or tightening stance at the upcoming meeting. This weeks CPI and PPI inflation data, as well as the progress of US-Iran negotiations, may influence the balance between neutral and tightening.Fed mouthpiece Nick Timiraos: May core CPI rose 0.21% month-over-month, very close to expectations, pushing the 12-month core CPI annual rate to 2.9%.

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

Daniel Rogers

Sep 19, 2022 14:34

 161.png

 

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.

Suggestion