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On May 27th, analysts in a Reuters survey said that despite the Nikkeis rapid rise keeping forecasters busy, the index will continue to reach new record highs, driven by the artificial intelligence boom and strong corporate earnings. The median forecast in the Reuters survey showed analysts expect the index to reach 69,000 points by the end of next year, setting another record. The Nikkei closed at 64,996.09 points on Tuesday. Yunosuke Ikeda, head of macro research at Nomura Securities, is bullish on stocks, but the Nikkeis rise has exceeded his expectations—he had previously predicted the index would reach 63,000 points by December and 65,000 points a year later. He said that as a forecaster, this rally is "too fast to keep up with." Of the 12 respondents who answered a supplementary question, seven said their view on the AI boom driving stock market performance remained largely unchanged compared to three months ago. The remaining five were more optimistic. At the same time, Ikeda stated that optimism about artificial intelligence is not a necessary condition for the stock market to continue rising.1. The three major U.S. stock indexes closed mixed. The Dow Jones Industrial Average fell 0.23% to 50,461.68 points, the S&P 500 rose 0.61% to 7,519.12 points, and the Nasdaq Composite rose 1.19% to 26,656.18 points. Chevron fell more than 3%, and UnitedHealth Group fell nearly 3%, leading the decline in the Dow. The chip and memory sector led the gains, with Micron Technology surging more than 19%, its total market capitalization surpassing $1 trillion for the first time. UBS significantly raised its target price for Micron from $535 to $1,625. SanDisk rose more than 7%, Western Digital rose more than 8%, and Seagate Technology rose 4%. The Wind U.S. Tech Big Seven Index rose 0.22%, with Tesla and Google rising more than 1.5%. 2. European stock indices closed mixed. The German DAX index fell 0.8% to 25,184.89 points, the French CAC40 index fell 1.03% to 8,173.11 points, and the UK FTSE 100 index rose 0.24% to 10,491.39 points. 3. US Treasury yields fell across the board. The 2-year Treasury yield fell 7.91 basis points to 4.034%, the 3-year Treasury yield fell 7.66 basis points to 4.083%, the 5-year Treasury yield fell 6.79 basis points to 4.172%, the 10-year Treasury yield fell 5.74 basis points to 4.485%, and the 30-year Treasury yield fell 3.57 basis points to 5.019%. 4. International precious metals futures generally closed lower. COMEX gold futures fell 1.45% to $4,507.30 per ounce, and COMEX silver futures fell 1.44% to $77.27 per ounce. 5. The WTI crude oil futures contract rose 3.62% to $93.57 per barrel; the Brent crude oil futures contract rose 3.06% to $96.28 per barrel. 6. Most London base metals rose. LME aluminum rose 0.69% to $3,674.5 per tonne, LME tin rose 0.61% to $54,505.0 per tonne, LME nickel rose 0.51% to $19,010.0 per tonne, LME lead rose 0.20% to $2,015.5 per tonne, LME copper fell 0.42% to $13,610.5 per tonne, and LME zinc fell 0.42% to $3,528.0 per tonne.The ousted chairman of BP (BP.N) has raised several disputes regarding allegations of misconduct.On May 27th, regarding the US strike on southern Iran, Iranian citizens expressed that the USs words and actions are not trustworthy and doubted the possibility of a US-Iran agreement. One Iranian citizen stated, "The Iran nuclear deal is a prime example; the US reneged on everything. This attack is the same. The USs contradictory statements clearly show that none of their pronouncements are guaranteed. However, I dont think the war will continue because the US has paid a heavy price, and they are also afraid. We control the Strait of Hormuz, which, for the US, is probably worse than having a hundred nuclear bombs. We are very familiar with those US statements; they are unreliable, and we must be highly vigilant. People must be careful because we must consider the possibility of something similar to the US withdrawing from the Iran nuclear deal happening again; in other words, the US-Iran agreement might be torn up."Conflict Status: 1. Ukraine claims energy facilities were attacked, causing power outages in multiple locations. 2. Russian Security Service: Russia and Belarus jointly prevented Ukraine from transporting over 500 explosive devices to Russia. 3. According to Interfax news agency: The Russian Ministry of Defense stated that Russian troops have taken control of Zapsilya and Ryasny in eastern Ukraine. Peace Negotiations: 1. Russian Deputy Foreign Minister: There are currently no preconditions for strategic stability dialogue with the United States. 2. US Secretary of State Rubio: There are currently no ongoing or scheduled negotiations between the United States and Ukraine. Other Developments: 1. The United Kingdom announced a new round of sanctions against Russia. 2. Japan sent officials to Russia to "promote communication." 3. The European Council extended sanctions against relevant Russian individuals and entities. 4. Russia claims the United States did not issue visas to Russian officials to attend Security Council meetings. 5. The United Kingdom and Poland will sign a defense and security agreement to curb the Russian threat. 6. A court ruled that the European Clearing Bank must immediately compensate the Central Bank of Russia approximately €200 billion. 7. According to RIA Novosti: Russian Foreign Minister Lavrov explained the reasons that led Russia to decide to attack Kyiv during a phone call with US Secretary of State Rubio.

Forecast for the price of gold: Buyers of XAU/USD approach $1,800 on a weaker DXY ahead of US inflation

Alina Haynes

Aug 09, 2022 15:27

 截屏2022-06-07 下午5.14.47.png

 

The price of gold (XAU/USD) rose recently on the strength of a weaker US dollar and softer yields before rounding up to $1,790 on Tuesday during the first Asian session. The key started the week's trading on a strong note but fell by the end of the day, thus the metal's rising trajectory also borrowed ideas from equities.

 

US Dollar Index (DXY) followed Treasury rates to maintain Friday's significant gains, giving the greenback measure its first positive weekly result in three weeks. However, the US 10-year Treasury yields decreased by over seven basis points (bps) to 2.75 percent at the latest, following a 14-bps run-up on Sunday, while the DXY reported a 0.19 percent daily loss to 106.37 by Monday's conclusion.

 

The market's possible indifference to the US-China disputes over Taiwan and China's strong July trade figures may also work in the purchasers' favor. Despite this, the dragon country continues to conduct military exercises close to the Taiwan border, despite recent US signals to the contrary. China's trade statistics for July are also included. Compared to predictions of $90 billion and $97.94 billion, the overall trade balance increased to $101.26 billion. More information indicates that imports fell to 2.3 percent compared to 3.7 percent predicted and 1.0 percent prior, and exports rose by 18 percent, below expectations of 15 percent and 17.9 percent, respectively.

 

However, it's important to note that rising hawkish Fed bets and the Fed's policymakers' support for the rapid rate hikes put the XAU/USD bulls under pressure. Despite this, following the positive US jobs report for July, interest rate futures indicated a 73 percent possibility of a 75 basis point rate hike by the Fed in September. The headline Nonfarm Payrolls (NFP) increased to 528K, exceeding the 250K expectation and the 398K previously upwardly revised. Additionally, the unemployment rate decreased slightly to 3.5 percent from the predicted and previous readings of 3.6 percent.

 

Following the release of the data, San Francisco Fed President Mary Daly stated over the weekend that the Fed's fight against inflation was far from over. The policymaker also stated that a 50 bps increase was unquestionably in the cards. We must have an open mind. Fed Governor Michelle Bowman echoed this sentiment when she stated that the Fed "should consider additional 75 basis-point interest rate hikes at upcoming meetings in order to bring excessive inflation back down to the central bank's target."

 

Future gold buyers may benefit from the weakening US dollar as well as the technical information provided below. The US Nonfarm Productivity and Unit Labor Costs for the second quarter will be crucial to monitor (Q2). Forecasts indicate that US Nonfarm Productivity may increase to -4.6 percent from -7.3 percent before, while Unit Labor Costs may decrease to 9.5 percent from 12.6 percent previously. Additionally, news about Russia and Taiwan will be crucial for obtaining precise instructions.

 

The price of gold not only recovered from a crucial short-term support line, but also crossed the 50-DMA for the first time since late April on a daily closure. In order to inspire confidence in purchasers, the rising rise takes cues from the higher RSI (14), which is not overbought, as well as positive MACD signals.

 

Having said that, the XAU/USD buyers are prepared to push through the $1,802 Fibonacci retracement of the April-July slide to reprise the monthly high near the $1,800 mark.

 

But beyond that, a downward-sloping resistance line from mid-June, near $1,827, would pose a problem for the gold bulls. The metal's short-term downside might be constrained by the 50-DMA and the aforementioned support line, which are respectively located near $1,786 and $1,780.

 

The 21-DMA and the 23.6 percent Fibonacci retracement level, which are located at $1,755 and $1,741 in that order, could then catch the attention of the XAU/USD sellers. Overall, the price of gold seems poised to build on recent gains and move closer to the 1.5-month-old resistance line.


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