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On September 20, the Peoples Bank of China announced that it would keep the one-year and five-year loan prime rates (LPR) unchanged at 3% and 3.5%, respectively.On September 20, the U.S. embassies in Bahrain, Oman, the UAE, Saudi Arabia, Qatar, Kuwait, Jordan, Israel, Lebanon, and Iraq issued security alerts stating that given the tense situation in the Middle East, the current security environment remains complex, with unforeseen escalation risks. U.S. citizens currently in the Middle East should remain highly vigilant and be aware of potential flight cancellations, airspace closures, and travel disruptions. U.S. citizens outside the Middle East should seriously reconsider their travel plans to or transit through the region. The security alerts all mention the recent conflict between the Houthi rebels in Yemen and Saudi Arabia, stating that this military conflict has the potential to escalate rapidly, and U.S. citizens traveling to or from the region should closely monitor the latest information regarding airport and airline operations.On September 20th, Acer Chairman Chen Chun-sheng stated on the 19th that while the supply of storage and CPUs is tight for a few specifications, the shortage of other specifications is easing. However, due to the high and volatile prices of components, it is estimated that the prices of terminal PC products will continue to rise in the fourth quarter of this year, with an average increase of 5-20%. Prices are not expected to reverse until the second half of 2027.On September 20th, it was reported that on the 18th, Spanish government sources estimated that, based on information provided by national security forces deployed in Ceuta, approximately 10,000 migrants remain stranded in Ceuta. Some are housed in government-established facilities, while others are displaced and forced to live in makeshift tents in mountainous areas and beaches. The Ceuta local government estimates that approximately 13,000 migrants remain in the area. In late July, a large influx of migrants from Morocco into the Spanish enclave of Ceuta triggered Spains worst border migration crisis in recent years.On September 20th, the Gaza Strip health department and Shifa Hospital stated that on September 19th, local time, the Israel Defense Forces (IDF) conducted airstrikes on areas surrounding Gaza City and the Jabaliya refugee camp in northern Gaza, resulting in the deaths of two Palestinians. As of now, the IDF has not responded to this report.

Forecast for Gold Price: XAU/USD licks US inflation-related wounds near $1,700

Alina Haynes

Sep 14, 2022 11:39

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Gold price (XAU/USD) is under pressure near $1,700 as bears take a pause following the largest daily decline in two weeks due to US inflation. However, it should be noted that a lack of important data/events appeared to limit bullion's quick movements throughout Wednesday's Asian session.

 

Tuesday's US inflation statistics rekindled fears about the Federal Reserve's fast rate hike and exacerbated recession concerns. Also acting as factors for a decline in the XAU/USD are geopolitical concerns over China and Russia.

 

In August, the US Consumer Price Index (CPI) surpassed market expectations by increasing 8.3% year-over-year (YOY), compared to 8.8% previously. However, the monthly data increased to 0.1%, exceeding the -0.1% anticipated and 0.0% previous estimates. The core CPI, which excludes food and energy, likewise exceeded the 6.1% consensus and 5.9% prior to printing at 6.3% for the month in question.

 

Following the release of US inflation statistics, wagers on the Fed's next move became further aggressive, with a 75 basis point (bps) raise next week appearing nearly probable. There is a 25% possibility that the US Federal Reserve (Fed) will announce a complete 1% hike in the benchmark Fed rate at its meeting on September 21.

 

It should be mentioned that the yield inversion expanded after US inflation data and fueled recession concerns, which in turn weighed on the XAU/USD values due to the pair's reputation as a risk-barometer. However, following the release of the data, rates on 10-year US Treasury notes rose to 3.412% and those on 2-year bonds rose to 3.76%, from roughly 3.411% and 3.745%, respectively. In addition, the US stock market experienced its largest daily decline in over two years following the announcement of the US CPI, which thrilled metal bearish.

 

In addition to the rush toward deeper ties with China, US Vice President Joe Biden's efforts to raise China's troubles contribute to Sino-American tensions. In addition, worries that Russia will retaliate harshly after retreating from certain regions of Ukraine weighed on market mood and the price of gold.

 

A light schedule ahead of the US Producer Price Index (PPI) may keep XAU/USD on the precarious floor, but bears are likely to maintain control until Thursday's US Retail Sales for the month of August and Friday's preliminary reading of the Michigan Consumer Sentiment Index for September.

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