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On November 21st, at a hearing in the Japanese Diet, Bank of Japan Governor Kazuo Ueda stated that the continued weakness of the yen could further push up inflation. He pointed out that import prices have risen due to the yens weakening, and companies are currently more willing to raise wages and product prices. Ueda emphasized that the impact of exchange rate fluctuations on prices is becoming more significant than before, and the central bank must remain highly vigilant. This statement indicates that he is leaning towards supporting a rate hike in December. If Ueda ultimately votes in favor of a rate hike, he will join forces with two hawkish members (Hiroshi Takada and Naoki Tamura) who had previously called for a rate hike at the October meeting and voted against it. Furthermore, council member Junko Koeda also made hawkish remarks yesterday, indicating that concerns about inflation risks are rising at the policy level. Although Deputy Governor Ryozo Himino, along with most members, maintained the interest rate unchanged at the last meeting, he is considered to be hawkish. Currently, only Asahi Noguchi remains firmly dovish. New member Masakazu Yoshiyuki is considered a centrist and is expected to follow the mainstream opinion led by Ueda.Japanese Finance Minister Satsuki Katayama: It is crucial that the government and the Bank of Japan continue to work closely together to end deflation, achieve price stability, and promote economic growth.Japanese Finance Minister Satsuki Katayama: Japan is still halfway to achieving sustainable and stable price increases that accompany wage growth.The yield on 40-year Japanese government bonds fell 5.0 basis points to 3.695%. The yield on 30-year Japanese government bonds fell 5.0 basis points to 3.325%.The Hang Seng Tech Index fell sharply in early trading, dropping more than 3%, while the Hang Seng Index fell more than 2%. Baidu (09888.HK) and NIO (09866.HK) both fell more than 6%.

Gold Price Prediction: XAU/USD is poised to break below $1,950 as the USD Index reaches a new weekly high

Alina Haynes

Apr 03, 2023 14:13

After a massive sell-off during the Asian session, the gold price (XAU / USD) is hovering close to $1,950. The price of gold is expected to continue to decline as concerns of a resurgence in U.S. inflation are rekindled by higher crude prices following the decision of OPEC+ to reduce production. The Producer Price Index will increase as a result of factory proprietors increasing the prices of products and services at factory gates in response to higher oil prices. (PPI). Eventually, inflationary pressures in the United States would increase significantly.

 

The US Dollar Index has been invigorated by the environment of rising inflation expectations. (DXY). Investors believe that the Federal Reserve (Fed) will have no choice but to raise interest rates, which has caused the USD Index to reclaim its weekly high above 103.00. In May, Fed Chair Jerome Powell may announce an additional 25 basis point (bps) rate increase, which will drive interest rates above 5%.

 

The abatement of US banking worries is another factor that has a significant impact on the gold price. Investors have digested the short-term hysteria caused by the failure of three mid-sized banks, and they anticipate no further casualties in the near future.

 

The inability of S&P500 futures to recover losses from the morning session is due to the likelihood that higher oil prices will result in higher operating costs for oil-dependent companies. The alpha produced by 10-year U.S. Treasury yields has surpassed 3.52 percent.

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