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April 28th - As obstacles to Kevin Warshs confirmation as the next Federal Reserve Chairman appear to be diminishing, markets are reassessing the potential implications of this change. AMP Chief Economist Shane Oliver stated that Warsh is committed to maintaining the Feds independence and may prioritize AI transformation over employment. Oliver said he might also prioritize cut-off mean inflation over core PCE, though this could be seen as a selective approach. Oliver added that his stance might be slightly more dovish than Powells, but not fundamentally different.According to Fox News, U.S. Secretary of State Marco Rubio said that the pressure on Iran is "extraordinary" and that more pressure could be applied.April 28th - Amid escalating geopolitical turmoil, British retailers offered discounts to stimulate consumer spending, helping to cool shop price inflation in the UK in April. The UKs BRC Shop Price Index fell to 1% year-on-year in April from 1.2% in March. Food inflation fell to 3.1% from 3.4% a month earlier, while non-food prices fell 0.1% year-on-year, reversing the 0.1% increase in March. Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), said that retailers intensified price competition in an environment of weakening consumer confidence to stimulate more spring spending. She stated, "While we havent yet seen the full impact of the Middle East conflict on consumer prices, that impact will soon begin to appear."The UKs BRC Shop Price Index rose 1% year-on-year in April, down from 1.20% previously.April 28th - This week is destined to be significant for the Federal Reserve. Following the Justice Departments conclusion of its investigation into Jerome Powell, Republican Senator Tillis withdrew his obstruction of the confirmation process for Fed Chair nominee Dirk Warsh on Sunday. The Senate Banking Committee has scheduled a vote on Warshs nomination for 10 p.m. Beijing time on Wednesday, clearing the way for a full Senate confirmation vote before the week of May 11th. Hours after the nomination vote, the Fed will announce its April interest rate decision, and Powell will hold his 63rd, and likely final, Fed Chair press conference. If Warshs nomination for both Fed Chair and Board of Governors is approved, he will replace Jerome Milan, who temporarily filled the vacancy on the Board of Governors, becoming the shortest-serving official since the 1950s. If Milan fails to rejoin the Fed, he will attend his sixth and final Fed meeting this week, having consistently championed interest rate cuts. The question now is whether Powell will, as is customary, relinquish his Board of Governors seat (which expires on January 31, 2028) upon stepping down as Fed Chair (his term ends on May 15th). If Powell chooses to leave immediately and another of Trumps own appointees fills his vacancy on the Federal Reserve Board, Trump will have four of his own appointees (Woller, Bowman, and Warsh) on the seven-member board. This provides support for Trump to take potentially aggressive measures (including removing regional Fed presidents) to dismantle the Feds traditional structure. Powells final choice will directly influence the pace and extent to which Warsh or Trump reshape the Feds operations.

Gold Price Prediction: The XAU/USD pair will fall below $1870 as yields rise ahead of Fed Chair Powell's speech

Alina Haynes

Jan 10, 2023 14:55

截屏2023-01-09 下午5.31.06_1024x576.png

 

In the Tokyo session, the gold price (XAU/USD) has fallen below the immediate resistance of $1,870.00. The precious metal has broken through the consolidation formed in the band of $1,870.00-1,881.50 as demand for US government bonds deteriorates ahead of the speech by Federal Reserve (Fed) chairman Jerome Powell on Tuesday.

 

The 10-year US Treasury yields have risen beyond 3.54 percent, dampening risk appetite. Meanwhile, S&P500 futures have become volatile following a sell-off late in Monday's session, signaling caution in establishing positions in risky assets. The US Dollar Index (DXY) is anticipated to attempt a break above the immediate resistance of 103.00 into the auction area.

 

Investors anticipate Fed Powell's speech for fresh cues, as it will provide a head start for the entirety of CY2023. Despite a sharp reduction in December wage inflation, some Fed policymakers continue to endorse a terminal rate prediction of 5.00-5.25%.

 

Mary Daly, president of the San Francisco Fed Bank, argued that interest rates between 5% and 5.25 percent are fair. Also, the president of the Atlanta Federal Reserve bank, Raphael Bostic, anticipates an interest rate peak in the range of 5% to 5.25 percent and the continuation of higher interest rates through CY2023.

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