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On November 11th, economists at ABN AMRO stated in a report that the politicization of US institutions and pressure on independent agencies under the Trump administration pose a risk to the dollars dominance as the global reserve currency. They pointed out that the decline of US institutions has continued rapidly since the beginning of the year, raising serious concerns about the reliability of the dollar reserve system. The White House is firing oversight agencies, prosecuting political opponents, dismantling regulation, and restructuring institutions in a deeply partisan manner. They stated that this raises questions about whether the US can continue to maintain its rule-abiding, diversified institutions and strong markets—factors that attract investment to the US and support the dollar.On November 11, a Turkish prosecutor called for a more than 2,000-year prison sentence for Istanbul Mayor Ekrem Imamoglu in a corruption case, potentially barring President Erdogans strongest challenger from running in the next presidential election. The 3,900-page indictment names 402 suspects and describes Imamoglu, the most prominent opposition figure, as the "founder and leader of a criminal organization." Charges include bribery and accepting bribes. Following the news, the Turkish stock market plummeted, with Istanbuls benchmark index falling 3.1% by the afternoon local time. The index is heading for its biggest one-day drop since early September.Russian Foreign Minister Lavrov: Russia is ready to discuss its concerns with the United States regarding Russias "suspicious underground activities."Russian Foreign Minister Sergey Lavrov: Russia is concerned about the United States claim that it will use nuclear tests for geopolitical purposes.Russian Foreign Minister Lavrov: It is possible that the new Strategic Arms Reduction Treaty could be extended for another year at any time before it expires on February 5.

Gold Price Prediction: The XAU/USD pair flirts with a two-week high below $1,800 ahead of US PCE Inflation

Alina Haynes

Dec 01, 2022 15:03

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Gold price (XAU/USD) oscillates near a two-week high in the vicinity of $1,780 on Thursday morning as buyers await critical US inflation data. Consequently, during the three-day upswing, the price of bullion advances to within a few minutes of the previous multi-day high.

 

Notably, dovish statements from Federal Reserve (Fed) officials, particularly Chairman Jerome Powell, combined with weaker US employment-related data to drive the Gold price higher the day before. In the same vein, the virus-driven activity limitations in China have loosened as the dragon kingdom reported three consecutive days of dropping daily infections after setting a new record high.

 

However, a recent increase in US inflation expectations, as indicated by the 10-year and 5-year breakeven inflation rates as reported by the St. Louis Federal Reserve (FRED) data, should have also investigated the metal's recent upward movement. Additionally challenging the XAU/USD bulls could be Jake Sullivan's pessimistic views, which signal that the Sino-American optimists face new obstacles. "The United States views China as a growing strategic danger," the official stated.

 

As a reflection of the market's sentiment, S&P 500 Futures post modest gains, while Asia-Pacific equities follow Wall Street's upward trend. In addition, US 10-year Treasury bond yields continue under pressure around 3.62 percent a day after hitting a two-month low.

 

Janet Yellen, secretary of the US Treasury, has stated that the US economy will likely be able to accomplish a so-called "soft landing," in which inflation decreases without triggering a severe recession. Gold buyers remain optimistic as they await the Fed's favored inflation indicator, the US Core Personal Consumption Expenditure (PCE) Price Index for October, which is anticipated to be 5.0% YoY versus 5.1% before.

 

In addition, the US ISM Manufacturing PMI for November, which is anticipated to be 49.8 compared to 50.2 in October, as well as news about China and comments from the Fed's second-tier policymakers will be crucial.

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