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On June 30th, former Bank of Japan executive director Kenzo Yamamoto stated, "The Bank of Japan is currently in a position where it needs to act quickly." When asked whether the central bank would raise interest rates again in December, as most economists surveyed predicted, Yamamoto said, "Given the current level of monetary easing, the next rate hike is likely to occur before then." Yamamoto pointed out that the banks underlying inflation gauge (excluding special factors such as fresh food and government subsidies) has averaged around 3% over the past four years, well above the central banks 2% target. However, Japans key inflation gauge—the core consumer price index excluding only fresh food—remained at 1.4% in May, mainly due to measures introduced by Prime Minister Sanae Takaichi to alleviate cost-of-living pressures. The Bank of Japan recently stated that price trends remain slightly below 2%. "I would be concerned if the Bank of Japan claimed that its underlying inflation gauge failed to reflect price trends," Yamamoto said. "The Bank of Japan needs to shift its policy focus to curbing inflation."Samsung Electronics is currently up 2%, and SK Hynix is up 1%.June 30th - The British Retail Consortium (BRC) reported that UK food inflation has fallen to its lowest level in 15 months, the latest sign of easing cost pressures that could prevent the Bank of England from raising interest rates. Data released on Tuesday showed that UK food prices rose 2.4% in early June, down from a 2.7% increase the previous month, mainly due to lower inflation for fresh food. Overall retail price increases remained at 1.2%. BRC Chief Executive Helen Dickinson said, "Thanks to a bumper harvest and intense market competition, retailers have helped keep prices for summer treats like strawberries and ice cream low." Private sector surveys and official data showed that overall inflation in the UK economy had been more stable than previously expected before the initial peace agreement between the US and Iran led to a drop in oil prices. Therefore, the market no longer fully expects the Bank of England to raise interest rates this year, whereas previously it had anticipated three to four hikes of 25 basis points each.Japans inventory levels fell 0.6% month-on-month in May, compared with a previous decline of 0.3%.Japans industrial production fell 1.7% year-on-year in May, compared with a forecast of 1.2% and a previous reading of 2.00%.

Gold Hits 3-month High As Powell Signals End to Rate Hikes

Haiden Holmes

Dec 01, 2022 11:09

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Gold prices rose to a three-month high on Thursday as a result of Federal Reserve Chair Jerome Powell's prediction of fewer interest rate hikes, while copper prices surged to a two-week high as a result of a reduction in COVID-19 lockdowns in China.


The Fed chair noted in a speech delivered in Washington that the central bank will likely moderate its rate hikes in the coming months as it monitors the effects of this year's major interest rate hikes on the economy.


Powell cautioned, though, that the U.S. interest rate peak will be substantially higher than anticipated, in part because of persistently high inflation. In October, the Fed's preferred inflation gauge, the personal consumption expenditures price index, was well above the Fed's target of 2%.


Nevertheless, Powell's comments prompted a broad-based bounce in metal markets, as the prospect of slower rate hikes brought some short-term solace to markets hammered by rising interest rates this year.


Spot gold rose 0.5% to $1,778.20 per ounce, while gold futures expiring in February rose 1.8% to $1,791.25 per ounce, their highest level since mid-August. On Wednesday, both assets increased by more than 1 percent.


In addition, gold prices posted substantial gains in November, as several Fed officials predicted fewer rate hikes in the coming months.


However, the outlook for gold is clouded by uncertainty over where U.S. interest rates will peak, given that the Fed's terminal rate will be determined in large part by U.S. inflation.


Copper prices reached their highest level in over two weeks on the back of optimistic indications of China's reopening.


Copper futures were unchanged near $3.7838 per pound on Thursday, after gaining more than 4% in the prior session, their largest gain in over a month.


This week, China loosened COVID-related restrictions in two major cities in response to growing public opposition to the country's strict zero-COVID policy, which has sparked unprecedented protests across the nation.


This year, China's zero-COVID policy wreaked havoc on its economy, disrupting corporate activities and dampening the country's appetite for commodities.


However, it is widely anticipated that the reopening of the world's largest copper importer will stimulate a demand recovery, thereby increasing copper prices.


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