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February 5th - In a report, Sanjay Raja of Deutsche Bank Research stated that the prospect of a Bank of England rate cut has significantly strengthened, but the pace of cuts may be relatively slow. The Bank of England decided on Thursday to keep interest rates unchanged at 3.75% by a 5-4 vote, and hinted at possible further rate cuts in the coming months. Raja said, "The risks remain skewed towards a slower pace of rate cuts, but we remain confident that the Bank of England will cut rates twice this year."U.S. Treasury Secretary Bessenter: Warsh is fully qualified to be the Federal Reserve Chairman.U.S. Senate Majority Leader Thune: Democrats demands for funding to the Department of Homeland Security are "unrealistic".U.S. Treasury Secretary Bessant testified before the Senate Banking Committee, reiterating his testimony from the House Financial Services Committee the previous day.February 5th - U.S. job openings unexpectedly fell to their lowest level since 2020 in December, while layoffs rose slightly, further indicating weak demand for labor. Data from the Bureau of Labor Statistics on Thursday showed that job openings fell to 6.54 million in December from a revised 6.93 million in November, below market expectations. The decline in job openings was primarily driven by professional and business services and retail, while the increase in layoffs reflected larger-scale layoffs in the transportation and warehousing sectors. Hiring increased somewhat, but remained at a low level overall. The data suggests that businesses remain cautious about the pace of hiring as they assess their workforce size and the outlook for economic activity. This data also reinforces the Federal Reserves assessment that wage growth is not a source of inflationary pressures. The report showed that the ratio of job openings to job losses was 0.9 in December, a measure closely watched by the Federal Reserve to gauge the balance of labor supply and demand. This ratio peaked at 2 to 1 in 2022.

Forecast for Gold Price: XAU/USD surpasses $1,650 on falling wedge breakthrough; US PCE inflation observed

Daniel Rogers

Sep 30, 2022 10:46

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Gold price (XAU/USD) is anticipating its first weekly increase in three weeks as metal investors push $1,663 following the confirmation of the falling wedge bullish chart pattern the day before. In doing so, gold celebrates a weaker U.S. dollar but disregards the market's dismal conditions.

 

Consequently, the US Dollar Index (DXY) recorded another negative day, reestablishing the weekly low around 111.95. After the latest readings of the US Gross Domestic Product (GDP) for the second quarter confirmed the early projections of -0.6%, the greenback fell against the six major currencies.

 

It should be noted that the firmer printing of the US Weekly Initial Jobless Claims, which fell to 193K for the week ending September 24 compared to 209K before (updated from 213K) and the market's forecast of 215K, may have also weighed on the DXY. The US Initial Claims for Unemployment fell to their lowest level since April.

 

While respecting the data, St. Louis Federal Reserve Bank President James Bullard praised the decline in weekly Initial Jobless Claims and stated, "We will push inflation to 2% in a reasonable compact time frame." Elsewhere, Federal Reserve Bank of Cleveland President Loretta Mester stated on Thursday that they are not yet in a position to consider stopping interest rate hikes.

 

In addition to the Fed's aggressive rhetoric, anxieties originating from the United Kingdom, Russia, and China also test sentiment and the XAU/USD bulls, but they were unable to halt the price decline.

 

It's hard to avoid the conclusion that fiscal easing announced will prompt a significant and necessary monetary policy response in November," said Bank of England Chief Economist Huw Pill. On the other hand, record high German inflation, Russia's willingness to annex more parts of Ukraine, and the chatter over China's inability to tame its recession woes were also challenging the risk appetite.

 

As a result of these bets, Wall Street benchmarks reversed all Wednesday gains, while Treasury yields recovered.

 

Traders will pay special attention to the Fed's preferred inflation gauge, namely the Core Personal Consumption Expenditures (PCE) Price Index for September, which is anticipated to increase 4.7% year-over-year compared to the prior reading of 4.4%. If the actual outcome is stronger than anticipated, the XAU/USD exchange rate may struggle to rise.

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