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September 18th - Nikkei futures extended gains as the yen weakened after the Bank of Japan raised its policy rate by 25 basis points to 1.25%, a move widely expected. The Bank of Japan stated that underlying inflation is approaching its 2% target and that it will closely monitor Middle East conflicts, the yens exchange rate, and demand for artificial intelligence. Investors are now focused on Governor Kazuo Uedas press conference later on Friday for clues about the pace of future rate hikes.Following the Bank of Japans interest rate hike, gains in benchmark 10-year Japanese government bond futures narrowed, with the latest increase being 0.22 yen.On September 18th, Goldman Sachs maintained its year-end gold price forecast of $5,400/oz. Goldman Sachs stated that while the latest US interest rate hike may slow golds rise, it will not change its long-term bullish outlook. In its report, Goldman Sachs expects "the impact of tighter monetary policy to primarily manifest as a slowdown in the short-term appreciation path of gold, rather than a decline in the final gold price"; the continued diversification of reserves by central banks remains the main structural driver for its bullish outlook on gold. Goldman Sachs pointed out that if the Federal Reserve adopts a more hawkish policy, gold may experience a more significant correction. If the Fed raises interest rates three more times this year and signals further increases in final interest rates, gold prices could fall to around $4,070/oz; however, with central banks continuing to purchase gold to support the market, gold prices are expected to rebound to around $4,200/oz by the end of 2026.On September 18th, Barclays revised its forecast for the Bank of Englands monetary policy, now expecting a 25 basis point rate hike in November. The bank stated that signals from Bank of England policymakers following Thursdays meeting indicated heightened concerns about inflation risks.AirAsia Group co-founder: The Middle East war cannot last much longer.

Forecast for Gold Price: XAU/USD pares daily loss over 200-HMA as risk aversion subsides

Alina Haynes

Dec 08, 2022 15:04

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Gold price (XAU/USD) recovers to $1,785 during the first hour of Thursday's Asian session as market participants lick their wounds following a poor opening.

 

The most recent relaxation of the risk-averse sentiment, which originally helped the US Dollar prepare for weekly gains, may be related to news from China. Recently, Shanghai City Authorities announced that as of this Friday, they will no longer require Covid test checks at restaurants and entertainment venues. On the same line, the South China Morning Post (SCMP) reports that Hong Kong will "relax isolation regulations" for infected tourists on the fifth day after their release.

 

Even still, economic slowdown fears and Russia's use of nuclear weapons in its confrontation with Ukraine appeared to weigh on the XAU/USD exchange rate. In addition, Bloomberg released information indicating increased friction between the United States and China as a result of the current measures the United States Congress is attempting to adopt, which in turn threatens the Gold purchasers. Bloomberg reports that the United States is preparing to enact legislation that will change its policy toward Taiwan and restrict the government's use of Chinese semiconductors, steps that are guaranteed to anger Beijing despite President Joe Biden's efforts to reduce tensions.

 

As a result of these moves, the S&P 500 Futures have recovered from the three-week low to approximately 3,935 as of press time. In addition, 10-year US Treasury rates remain passive near 3.45% while trimming yesterday's losses to levels not seen since early September.

 

Ahead of next week's Federal Open Market Committee (FOMC) meeting, the Gold price may experience a period of sluggish performance. Traders may be interested in today's weekly US Initial Jobless Claims as well as Friday's first prints of the Michigan Consumer Sentiment Index and 5-year Consumer Inflation Expectations.


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