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On January 30, Elias Haddad, global head of market strategy at Brown Brothers Harriman, pointed out that if Warshs vision for Federal Reserve policy is implemented, the US yield curve may steepen further due to lower short-term interest rates, while long-term interest rates may remain stable or even rise due to insufficient credibility of US fiscal policy.On January 30th, Mark Dowding, Chief Investment Officer of BlueBay Asset Management, stated that the market widely expects Kevin Warsh to provide justification for a dovish stance, arguing that productivity gains from artificial intelligence will ensure inflation remains under control. Therefore, the futures market continues to anticipate two Fed rate cuts this year, consistent with expectations over the past few months. Compared to other potential candidates, Warsh is likely to be considered one of the less dovish ones. Previous interactions with other Fed members have shown that Warsh is highly respected, and his appointment as Fed Chairman is unlikely to pose a threat to the institutions independence.David Bahnsen, Chief Investment Officer of Barnson Group: Kevin Warsh enjoys respect and credibility in the financial markets, and anyone who gets the job (Chairman of the Federal Reserve) will inevitably lower interest rates in the short term. But I believe he will be a reliable candidate in the long run.Iranian Foreign Minister Araqchi: If necessary, we will strengthen cooperation with Türkiye.On January 30th, Trump announced his intention to nominate Kevin Warsh as the next Federal Reserve Chairman. Warsh served as a Fed governor from 2006 to 2011 and advised Trump on economic policy. He will succeed current Chairman Powell after his term ends in May, marking his return to the Fed. In 2017, Trump skipped Warsh and chose Powell instead. Warsh publicly advocated for interest rate cuts last year, aligning with Trumps stance and contrasting with his long-standing "hawkish" image. During his tenure at the Fed, Warsh consistently maintained a high level of vigilance regarding inflation and often supported higher interest rates. Trump previously stated that willingness to cut interest rates is considered a "litmus test" for the next chairman, raising market concerns about the potential damage to the Feds independence. Warshs Senate confirmation process may be further complicated by the Justice Departments recent announcement of an investigation into the Fed, with some Republican senators indicating they will block any Fed nomination until legal issues are resolved.

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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