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On May 5th, European Commission President Ursula von der Leyen responded to US President Donald Trumps recent threat of tariffs on automobiles, stating that the US cannot unilaterally raise tariffs and the EU is prepared for "all scenarios." On May 1st, Trump posted on social media that the US would raise tariffs on EU cars imported into the US because the EU had not complied with its bilateral trade agreement. Trump said tariffs on EU cars would increase to 25%. He added that cars manufactured in the US would not be subject to tariffs. In response, a European Commission spokesperson stated that the EU would "reserve all options" and assess possible follow-up measures. The spokesperson also stated that the EU is implementing the relevant trade agreement according to normal legislative procedures and is continuously informing the US of its progress.On May 5th, following the Reserve Bank of Australias (RBA) third consecutive interest rate hike and raising its cash rate target to 4.35%, the rate remains below Societe Generales year-end forecast of 4.7%. Societe Generale economists stated in a report, "The RBA still has room to maneuver and may raise rates at least one more time." Economists expect the RBA to maintain interest rates at 4.7% throughout 2027 and the first half of 2028, predicting core inflation will peak at 3.8% in the second quarter, before falling to 3.1% by the end of 2026. They added, "A pause in rate hikes in June seems inevitable," noting that RBA Governor Bullocks more neutral tone prompted demand for short-term rates, simultaneously pushing the yield curve for Australian 2-year and 10-year government bonds into a "bull market steepening."The World Health Organization says it plans to medically evacuate the two people on board who are infected with Hantavirus, and the cruise ship will continue its journey to the Canary Islands.World Health Organization: Our hypothesis is that the Hantavirus cases were contracted outside the cruise ship where the incident occurred.Iranian border police commander: Five smuggling vessels carrying 200,000 liters of smuggled fuel were seized in Khuzestan province.

Forecast for the Gold Price: XAU/USD bulls return, market remains tense

Alina Haynes

Dec 27, 2022 10:57

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According to yesterday's analysis, Gold Price Forecast: XAU/USD bulls must commit at critical trendline support, the Gold price has found demand at the aforementioned support region and has moved back in line with the larger bullish trend. On Friday, ahead of the Christmas holidays and long weekend, the price of gold inched up, aided by Friday's falling inflation statistics.

 

US consumer spending rose 0.1% in November after rising 0.4% in October, indicating that inflation is moderating, but not enough for markets to anticipate a policy shift from the Federal Reserve or a halt in their rate-hike trajectory. The index of personal consumption expenditures (PCE) decreased by 0.5 percentage points from October to 5.5% annually. Excluding volatile food and energy costs, the index increased on a monthly and annual basis by 0.2% and 4.7%, respectively, in accordance with expectations. The increased revision of October PCE inflation data is terrible news for the gold market.

 

Thursday's US Gross Domestic Product and Jobless Claims figures revealed that the nation's economy returned quicker than previously predicted and that the labor market remains extremely tight. Overall, the plethora of data offers little to alter the belief that the Fed will stick to its plan to combat inflation in 2023. The non-yielding, non-interest-bearing asset is on course for a second consecutive year fall as a result of these rate hikes enacted to curb price pressure.

 

According to Brown Brothers Harriman analysts, the markets continue to remain skeptical of the Fed. "After reaching a high of 5.5% following the most recent FOMC meeting, the terminal rate as observed on the swaps market has fallen down to approximately 5%," analysts explained. "Similarly, WIRP predicts a 50 bp increase on February 1 is priced in at only 33%, followed by a final 25 bp increase on March 22. We cannot see why the markets continue to oppose the Federal Reserve. With the exception of a few communications blunders here and there, chairman Jerome Powell and his colleagues have been firm about the need to raise interest rates for an extended period of time. Recent US data indicate that the labor market remains robust and that the Fed must take additional action.


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