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February 3rd - Todays interest rate hike was a difficult decision for the Reserve Bank of Australia (RBA), as it had just cut rates last August. The RBA had previously bucked the trend of other economies, deliberately keeping rates low for an extended period to prevent soaring unemployment. Now, it becomes the first major central bank to return to a rate-hiking path since the pandemic began. Some economists had predicted that the RBA might wait for more data, given recent slowing monthly inflation data and the strengthening Australian dollars potential to "cool" the economy. Domains chief economist, Nicola Powell, stated that while the rate hike would reduce borrowers ability to finance their homes, it would also weaken the upward momentum in the housing market. Assuming lenders fully pass on the cost of the rate hike, a borrower with a $600,000 loan would see their monthly payment increase by approximately $90. The focus now shifts to the tone set by Governor Bullock at the post-meeting press conference. Economists are currently uncertain whether the RBA will continue with rate hikes or if this is a one-off event.February 3 - The Reserve Bank of Australia raised interest rates by 25 basis points to 3.85%, in line with market expectations, after holding rates steady for three consecutive days.The Reserve Bank of Australia (RBA) set its interest rate at 3.85% on February 3, in line with expectations and down from 3.60% previously.On February 3rd, DBS Bank senior economist Radhika Rao stated in a report that the Indian market is poised for a rebound following the announcement of the US-India trade agreement. She noted that high tariffs were a major factor dragging down market sentiment over the past quarter, while the agreement is "undoubtedly a significant boon to the real economy and exports," and will also boost financial market sentiment. Rao added that textiles, gems and jewelry, engineered products, leather, and chemical products are expected to be the main beneficiaries. She wrote that considering the punitive tariffs previously imposed for purchasing Russian oil, the reduction from 50% to 18% effectively brings Indias tariff levels close to those of most Southeast Asian countries.According to sources, Republican leaders in the U.S. House of Representatives are planning to vote next week on a key bipartisan housing bill.

XAU/USD drops from three-week high above $1,750 ahead of US PCE inflation, according to the gold price forecast

Alina Haynes

Jul 29, 2022 10:44

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In the Asian session on Friday, buyers and sellers jostled for position near a three-week high, but the gold price (XAU/USD) was unable to maintain its two-day advance. Nevertheless, the price of the precious metal recently declined to $1,754 as the US dollar's yield was tracked in order to delay the bearish tilt before the important inflation report.

 

US Dollar Index (DXY) maintains its position at 106.00 while being close to its lowest point since July 2005. Over the past two days, the greenback gauge fell as concerns about the Fed's aggressiveness subsided.

 

On the other hand, a corrective fall in US Treasury rates following a retest of the multi-day low combines the uneven growth triggers to put pressure on the price of XAU/USD. In spite of this, the US 10-year Treasury rates are fluctuating about 2.67 percent, the lowest levels since early April, while the 2-year bond coupons are under pressure at a three-week low, down 0.14 percent intraday at the latest.

 

Following Fed Chair Jerome Powell's tease about "neutral rates," gold traders should have followed the Flash readings of the US Q2 GDP, which marked the "technical recession" by decreasing for the second time in a row, to encourage the USD currency weakness and soar even higher. Despite this, the initial estimates of the US Q2 GDP showed an annualized number of -0.9 percent compared to an expected figure of 0.5 percent and a prior figure of -1.6 percent. Additionally, the US Initial Jobless Claims increased by 256K during the week ended on July 22, above expectations by 253K.

 

However, as the US Q2 GDP fell for the second consecutive quarter, US policymakers—including Fed Chair Powell and Treasury Secretary Janet Yellen—teased the idea of a "technical recession" and attempted to dismiss it. The same questions are directed at central bankers who are urging further rate increases to rein down inflation. Additionally, meetings between US Vice President Joe Biden and his Chinese counterpart Xi Jinping went generally well and put downward pressure on the demand for the dollar as a safe haven.

 

China recently raised concerns for the XAU/USD traders after the Politburo meeting by avoiding discussing its Gross Domestic Product (GDP) objective and citing its position as one of the world's top purchasers of gold.

 

S&P 500 Futures increase by 0.5 percent amid these moves to hover close to their best levels since early June.

 

In the near future, it will be crucial to keep an eye on the Fed's favorite inflation indicator, the Core Personal Consumption Expenditure (PCE) Price Index, which is predicted to increase by 0.5 percent MoM for July compared to its previous rate of 0.3 percent.


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