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1. All three major U.S. stock indexes closed higher. The Dow Jones Industrial Average rose 0.66% to 48,535.99 points, the S&P 500 rose 1.18% to 6,967.38 points, and the Nasdaq Composite rose 1.96% to 23,639.08 points, marking its tenth consecutive day of gains. Amazon and Nvidia led the gains, rising nearly 4%. The Wind U.S. Tech Big Seven Index rose 2.83%, Facebook rose more than 4%, and Google rose more than 3%. The Nasdaq China Golden Dragon Index rose 2.35%, iQiyi rose more than 11%, and JD.com rose nearly 8%. 2. European stock indices all closed higher. The German DAX rose 1.27% to 24,044.22 points, the French CAC40 rose 1.12% to 8,327.86 points, and the UK FTSE 100 rose 0.25% to 10,609.06 points. Although the US and Iran did not reach a final agreement, the ceasefire proposal significantly eased market concerns about a potential blockade of the Strait of Hormuz and reduced the risk of disruptions to European energy supplies. 3. The WTI crude oil futures contract closed down 7.08% at $92.07 per barrel; the Brent crude oil futures contract fell 4.05% to $95.34 per barrel. 4. International precious metals futures generally closed higher. COMEX gold futures rose 2.04% to $4,864.50 per ounce, and COMEX silver futures rose 5.23% to $79.62 per ounce.Japans Reuters Tankan non-manufacturing business sentiment index for April was 31, down from 25 in the previous month.Japans Reuters Tankan Manufacturing Sentiment Index for April was 7, down from 18 in April.April 15th - Optimistic expectations of renewed US-Iran peace talks have depressed oil prices, causing the S&P 500 to rebound sharply and approach its all-time high. This is expected to boost Asian stock markets at the open. Interactive Brokers chief strategist Steve Sosnick stated, "The key is not whether the talks have made substantial progress, but whether we can reasonably expect progress. Emotions are often more powerful than reality." Strategist Michael Ball analyzed that the S&P 500s rise stems from the markets belief that a war with Iran will not cause a full-blown economic shock. With the ceasefire agreement maintained, Saudi Arabias east-west oil pipeline resuming operation, and Iran considering suspending shipments through the Strait of Hormuz to advance negotiations, every headline of diplomatic efforts has given traders a sense of reduced tail risk.Israel Defense Forces: The Israel Defense Forces discovered armed Hamas militants in a truck in the central Gaza Strip and took action to eliminate the threat.

Gold Price Prediction: The XAU/USD pair recovers from $1,755 as Fed and US-China-inspired risk aversion subsides

Daniel Rogers

Aug 03, 2022 14:44

 截屏2022-08-02 下午5.45.57_1024x576.png

 

During Wednesday's Asian session, the gold price (XAU/USD) regains its intraday high above $1,765 while consolidating the largest daily decline in two weeks. In doing so, the yellow metal applauds the US dollar's retreat from its weekly high amid a lackluster Asian session. The recovery steps also take into account the more robust activity statistics from China.

 

The US Dollar Index (DXY) falls from the weekly high around 106.55 to 106.34 at press time as market risk aversion decreases in response to July's stronger China Caixin Services PMI. Consequently, the private services index for the dragon country increased to 55.5% from 48 predicted and 54.5 before.

 

Intraday, S&P 500 Futures increase 0.10 percent, while 10-year US Treasury rates decline 1.5 basis points (bps) to 2.72 percent at the latest.

 

Earlier in the day, the US-China spat over Taiwan attracted significant attention and prolonged the previous day's risk-averse sentiment, which impacted on gold prices. Recently, Taiwan's Ministry of Defense stated that China's drills surrounding Taiwan reflect the country's will to undermine regional peace and stability. It should be emphasized that China's warning to the United States not to play the Taiwan card and its pledge to punish Taipei independence advocates, as well as its restriction of natural sand shipments to the Asian economy, appeared to amplify the risk-averse sentiment and sink the US dollar. Concerns that squabbles between the world's top two economies may have further negative effects on the global economy exacerbated recession worries.

 

James Bullard, president of the Federal Reserve Bank of St. Louis, dismissed worries of a US recession while supporting a 50 basis point (bps) rate rise. According to Reuters, the president of the Federal Reserve Bank of San Francisco, Mary Daly, stated that she is awaiting incoming data to determine whether the Fed should slow the rate rises or maintain the present pace. Reuters reported that Chicago Fed President Charles Evans expressed support for a 50 basis point (bps) rate rise at the September meeting if inflation does not improve. In addition, Loretta Mester, president of the Cleveland Fed, stated that she does not believe the US is experiencing a recession and that the job market is in excellent condition. She acknowledged, though, that inflation has not dropped "at all."

 

US Factory Orders for June and ISM Services PMI for July will combine headlines on China and the Federal Reserve to influence short-term XAU/USD movements.


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