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The Hang Seng Tech Index turned negative, with stocks related to chips, nuclear power, and power equipment among the biggest losers.March 17th - The Federal Reserve is set to release an additional $200 billion in capital to several of the largest U.S. banks for their use. In recent years, the six largest U.S. banks have set aside substantial profits to meet stricter standards proposed by former Federal Reserve Vice Chairman for Supervision Barr. Much of this upcoming $200 billion release represents funds that are no longer needed. Later this week, U.S. regulators will unveil new proposals to update and, in some respects, relax U.S. capital regulations, a move that would boost stock buybacks, lending, and trading activity. However, this carries risks: deploying this additional capital too hastily could unhealthily lead to overheating of the economy and housing market. Such a large amount of additional capital will present banks with difficult choices. Goldman Sachs, JPMorgan Chase, and Morgan Stanley have all had to reconsider whether to return billions of dollars directly to investors through stock buybacks. Given the current high stock prices, this would be costly. All large lenders should be wary of expanding their lending too rapidly, as this almost always leads to an increase in bad debts as lending standards decline.1. WTI crude oil futures trading volume was 1,495,668 lots, an increase of 84,695 lots from the previous trading day. Open interest was 2,107,681 lots, an increase of 14,175 lots from the previous trading day. 2. Brent crude oil futures trading volume was 293,399 lots, a decrease of 7,786 lots from the previous trading day. Open interest was 286,510 lots, an increase of 6,372 lots from the previous trading day. 3. Natural gas futures trading volume was 431,760 lots, an increase of 283 lots from the previous trading day. Open interest was 1,568,818 lots, a decrease of 4,375 lots from the previous trading day.Iranian state television: The speaker of the Iranian parliament said that regional security must be sustainable and should not be imposed from the outside.On March 17th, eToro analyst Josh Gilbert stated that the Reserve Bank of Australias (RBA) first consecutive interest rate hikes since 2023 highlights the severity of the Middle East energy shock. This decision was far from easy, with the committee passing it by a near 5-4 vote. This was clearly not the rate hike the RBA wanted, but the institution is facing difficulties with escalating inflation risks and rising fuel prices. For families struggling with mortgage payments, rising fuel and food bills, this is undoubtedly a bitter pill to swallow. The rate cut many were hoping for is now highly uncertain. The RBAs decisiveness this time surpasses that during the 2022 Russia-Ukraine conflict, which could be a key turning point. If the conflict is resolved and oil prices return to normal, the March rate hike might be the last, but at present, this seems like wishful thinking.

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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