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July 3, a strong non-farm payrolls report broke the message conveyed by the recent weak economic data. Jack McIntyre, portfolio manager at Brandywine Global Investment Management, said: "In the battle between hard data and soft data, hard data is the winner. This means that the Fed is right to stay put." McIntyre said that changes in the market are flattening the yield curve, and the unwinding of popular steepening curve transactions may continue.July 3, the market focused on the expected increase in unemployment, but the actual unemployment rate fell to 4.1%, and the July Fed meeting will no longer be so important. Gregory Faranello, head of US interest rate trading and strategy at AmeriVetSecurities, said: The biggest problem is unemployment. The door to a rate cut in July has been closed, and the Fed will "take a vacation" in the summer. The Feds pointer to action is employment, which gives Fed Chairman Powell room to take a wait-and-see attitude.European Commission President Ursula von der Leyen: Our goal is to reach an agreement in principle with the United States.On July 3, analyst Joseph Richter said that the market may react to the decline in the unemployment rate, but this is only part of the overall situation. However, considering that the U-3 unemployment rate is crucial to the Feds response function, its decline may make the July or even September rate cuts off the table. This is consistent with our view of the fourth quarter trend.Danish Prime Minister: If the United States decides not to provide Ukraine with the necessary assistance, it will be a serious blow to Ukraine, the EU and NATO.

Gold Price Prediction: XAU/USD will fall to $1,900 due to a strengthening US Dollar and mixed investor attitude

Alina Haynes

Jan 31, 2023 16:09

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In advance of Tuesday's European session, the gold market (XAU/USD) maintains its decline as sellers hit a crucial support level near $1,920. In doing so, the precious metal reverses the mid-Asian session retracement off the stated trend line support.

 

The metal's weakness may be attributable to the contradictory information contained in International Monetary Fund (IMF) updates, as the global lender acknowledged inflation risks while expressing optimism for economic growth. Recent action by the Bank of Japan (BoJ) to defend the Yield Curve Control (YCC), which in turn puts a floor under global yields and weighs on the Gold price, may fall along the same line.

 

In addition, Monday's positive US data and expectations that the Federal Reserve (Fed) will do everything it takes to defend its hawkish monetary policy actions appear to impose downward pressure on the XAU/USD exchange rate.

 

Notably, the probable conclusion of Covid-led activity restrictions in the United States on May 11 and positive China PMIs previously drove the XAU/USD bounce from the $1,920 level.

 

US 10-year Treasury yields struggle to prolong a three-day rally near 3.54%, as the US Dollar Index (DXY) falls to 102.20 at the latest, reflecting the prevailing sentiment. In addition, both S&P 500 Futures and stocks in the Asia-Pacific area remain moderately available.

 

The US Federal Reserve's (Fed) monetary policy meeting will garner the lion's share of attention from Gold traders.


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