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On January 15th, the Ministry of Finance issued a notice revising the "Management Measures for Key Ecological Protection, Restoration and Governance Funds," clarifying the financial support policies for integrated protection and restoration projects of mountains, rivers, forests, fields, lakes, grasslands, and deserts, as well as ecological restoration projects of historically abandoned mines during the 15th Five-Year Plan period. The revision aims to standardize the use and management of funds and promote ecosystem protection and restoration. Eligible key ecological protection, restoration and governance projects will have a three-year implementation period. Regarding central government subsidies, support for integrated protection and restoration projects of mountains, rivers, forests, fields, lakes, grasslands, and deserts (also known as the "Mountain and Water Project") has been increased, raising the central government subsidy ratio. Projects within a province will receive a maximum subsidy of 75%, not exceeding 2 billion yuan. For the first time, cross-provincial joint applications for projects are explicitly supported, with cross-provincial projects receiving a maximum subsidy of 80%, not exceeding 2.5 billion yuan.On January 15th, Capital Economics analyst Marcel Tiliant pointed out that the upcoming Japanese general election is unlikely to lead to a significant easing of fiscal policy. Prime Minister Sanae Takaichis cabinet has the highest approval rating since the early days of Shinzo Abes administration, and the ruling coalition is expected to almost certainly extend its majority. However, he questions whether this will necessarily lead to a more accommodative fiscal policy. He stated that the massive supplementary budget passed last year to reduce gasoline surcharges and electricity prices has weakened the case for further fiscal expansion. Furthermore, Japan already plans to increase spending in its regular budget for fiscal year 2026. Any additional fiscal easing would require another supplementary budget, which Japan typically only uses in response to severe natural disasters or major economic turmoil.According to foreign media reports on January 15th, data released by the Petroleum Institute of Japan (PAJ) shows that as of the week ending January 10th, Japans commercial crude oil inventories were 9.9858 million kiloliters, a decrease of 367,647 kiloliters from the previous weeks 10.3534 million kiloliters. Japans commercial gasoline inventories were 1.6824 million kiloliters, a decrease of 13,325 kiloliters from the previous weeks 1.6958 million kiloliters. Japans commercial kerosene inventories were 2.0711 million kiloliters, a decrease of 156,230 kiloliters from the previous weeks 2.2274 million kiloliters. Japans commercial diesel inventories were 1.6332 million kiloliters, a decrease of 11,847 kiloliters from the previous weeks 1.645 million kiloliters.Goldman Sachs maintains its forecast that aluminum prices will fall as new Indonesian supplies enter the market in late 2026/early 2027.Goldman Sachs: The significant price increase is largely complete, and copper prices are increasingly prone to corrections.

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

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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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