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On September 7, OPEC+ agreed to increase production again in October. Amid weakening global demand, the Saudi-led OPEC group is pressing ahead with a six-month plan to regain market share. This decision will put pressure on oil prices, further confirming that Saudi Arabia has given up on pursuing higher prices and is focused on increasing revenue by restoring as much idle production as possible. Eight OPEC members, including Saudi Arabia, Iraq, and the UAE, said they will increase production by a total of 137,000 barrels per day next month. However, analysts say only Saudi Arabia and the UAE will be able to increase supply because most other members are already close to their production capacity limits. People familiar with the matter said that for Saudi Arabia, the political and economic costs of maintaining production cuts are too high. By quickly restoring production, Riyadh will also be able to assess the production capacity of each member country for possible future renegotiation of quotas.With a September Federal Reserve rate cut all but certain, options traders are widely betting on a stable stock market ahead of Thursdays CPI data. However, this bet could be risky if the data shows rising inflation. The markets rationale for a rate cut is straightforward: US job growth is stagnant and the economy needs stimulus. Fridays weak jobs data reinforced this expectation, prompting investors to fully price in a 25 basis point rate cut from the Fed next week. The markets reaction has been muted: US stocks fell slightly on Friday, and the fear gauge edged up slightly, but remains well below the critical 20 level, where it has mostly remained since June. Looking ahead, options traders are betting on a roughly 0.7% two-way move in the S&P 500 following Thursdays CPI release, below the 1% average realized move over the past year. However, this trade ignores a key risk: what if inflation figures significantly exceed expectations? "Its a very delicate balance right now," said Eric Teal, chief investment officer of Comerica Wealth Management. "Any data thats very positive or very negative could change the market outlook."On September 7, U.S. Treasury Secretary Jeffrey Bessant stated that the United States and Europe are discussing a new round of sanctions and secondary tariffs against Russia, hoping that the "collapse" of the Russian economy will prompt Putin to engage in peace talks with Ukraine. "We are ready to increase pressure on Russia, but we need the cooperation of our European partners," Bessant said. He also stated that President Trump and Vice President Cyril Vance spoke with European Commission President Ursula von der Leyen on Friday, and that von der Leyen subsequently discussed sanctions with Bessant.Israel Airports Authority: The first flight from Ramon Airport to Tel Aviv will take off soon.Russian Deputy Prime Minister Novak: OPEC+s production increase plan is beneficial to the Russian economy.

Gold Falls Prior to U.S. Inflation Data

Charlie Brooks

Jun 08, 2022 14:51

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Wednesday morning in Asia, gold prices were lower as investors awaited the U.S. consumer price index (CPI) for additional information on interest rate hikes.


Futures for gold decreased 0.05 percent to $1,851.05 as of 11:01 PM ET (3:01 AM GMT). Wednesday morning, the dollar, which often swings inversely to gold, inched higher.


Janet Yellen, the U.S. Treasury Secretary, stated on Tuesday that inflation might remain elevated, and the Biden administration is likely to boost the 4.7% inflation projection for this year in its budget proposal.


Yellen stated that transactions combining gold and Russia could be sanctioned, and that any attempts to avoid U.S. sanctions using gold are closely monitored.


Monetary policies remain on the minds of investors. They now await the U.S. CPI report on Friday for hints on the course of interest rate hikes.


As inflation, supply disruptions, and rising interest rates remain a concern, the World Bank has lowered its forecast for global growth this year to 2.9%, down from 4.1% in January.


In Asia-Pacific, Japan's first-quarter economy outperformed forecasts, with the country's gross domestic product (GDP) falling by 0.5 percent year-over-year in January-March, compared to the initial estimate of a decline of 1.0 percent released last month.


Tuesday saw the Reserve Bank of Australia increase interest rates to 0.85%.


In terms of other precious metals, silver fell 0.12 percent. Platinum decreased 0.28 percent, whereas palladium increased 0.74 percent.