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Market news: Nvidia (NVDA.O) and Deutsche Telekom plan to build a data center worth 1 billion euros in Germany.On October 28th, the Federal Reserves Policy Committee was expected to take two decisively dovish actions on Wednesday: a 25 basis point rate cut and a signal of further easing, while also announcing the end of its balance sheet reduction program (a move that could put downward pressure on Treasury yields). Derek Tang, an analyst at Fed watcher LHMeyer, noted, "The dual actions of a rate cut (coupled with expectations of subsequent easing) and an early halt to the balance sheet reduction program will significantly support market risk appetite." He added that while the decision to end the balance sheet reduction this week remains uncertain, the recent tightening of financing markets has significantly increased the likelihood of such a decision.According to the Financial Times on October 28, under new rules to be announced by the UK Financial Conduct Authority on Tuesday, traders shorting UK-listed companies will no longer need to publicly disclose their identities. The regulator is expected to adopt an anonymous aggregation system, publishing only the total amount of short positions held against each company. This rule change stems from the UKs departure from the EU regulatory framework after Brexit. While the EU previously required public disclosure of short positions exceeding 0.5% of a companys equity, the new UK rules will align with the US regulatory system, which only requires the disclosure of the total amount of short positions without disclosing the specific holders. The FCA also plans to relax the threshold for short sellers to report their positions to the regulator, raising it from 0.1% of equity to 0.2%. This change is seen as a response to the governments call to enhance the UKs economic competitiveness and is expected to be welcomed by the hedge fund community. However, the reduced regulatory transparency has also raised market concerns.On October 28, AMD (AMD.O) announced a supercomputer agreement with the U.S. Department of Energy. AMD will provide computing power for the Lux artificial intelligence supercomputer system at Oak Ridge National Laboratory. AMD stated that when the Lux and Discovery systems are fully deployed, they will represent a combined $1 billion in private and public funding. The Lux AI supercomputer is expected to be operational in early 2026.Market news: AMD (AMD.O) reached a supercomputer agreement with the US Department of Energy.

Forecast for the Gold Price: XAU/USD moves up above $1,850 as yields fall following FOMC minutes

Daniel Rogers

Jan 05, 2023 15:01

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In the late New York session, the gold price (XAU/USD) has attracted buying activity following a corrective move to approach the critical support of $1,850. After failing to sustain above $1,860.00, the precious metal declined; however, the corrective move is light and does not indicate a serious reversal.

 

After a decline in the U.S. Manufacturing PMI bolstered indications of further deceleration in the U.S. Consumer Price Index, market participants' demand for risk-perceived assets such as the S&P 500 increased (CPI). In response to a decrease in product demand, corporations may be compelled to reduce the price of factory items.

 

The US Dollar Index (DXY) fell below the 104.00 level as yields on 10-year US Treasuries were subjected to intense pressure and plummeted to roughly 3.69 percent. Safe-haven assets are under pressure due to the anticipation of a further fall in inflationary pressures. After remaining aggressive throughout the entire year, Federal Reserve (Fed) head Jerome Powell changed to a slowing scenario in December regarding an interest rate hike. Undoubtedly, the inflation rate is still a significant distance from the 2% target; yet, the presence of factors that support a further deceleration in the price index weighs on safe-haven assets.

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