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Tesla (TSLA.O) is redesigning the electric door locking mechanism.On September 18th, the Federal Reserves first interest rate cut in nine months triggered a rally in U.S. Treasury bonds, fueling market expectations that the Fed would initiate a series of aggressive rate cuts to support the economy. However, Fed Chairman Powell stated that Wednesdays rate cut was a risk management decision, arguing that a rapid adjustment of interest rates was unnecessary and that the Fed would make decisions on a meeting-by-meeting basis. This cautious statement dampened market hopes for a significant rate cut, sending U.S. Treasury bonds lower and yields higher. Gennadiy Goldberg, head of U.S. interest rate strategy at TD Securities, noted that Powells reluctance to express an overly dovish stance influenced interest rate movements, particularly as he framed the rate cut as an "insurance" measure.On September 18th, after the Federal Reserve made its interest rate decision, the "new bond king" Gundlach talked about the price of gold, which broke through $3,700 today. Gundlach pointed out that the price of gold has risen by more than 100% in the past two years and has risen by 45% so far this year. He called this trend "outrageous." Gundlach said: "Now even gold miners are participating, which shows that retail investors are beginning to join the momentum trading in the gold market." Gundlach pointed out that he has always been bullish on gold and predicted that the price of gold would reach $4,000 earlier this year. Today, he went a step further and expected the price of gold to rise by another $340 from the current level, an increase of about 9.2%. He said: "I think that by the end of this year, the price of gold will almost certainly close above $4,000.""New Bond King" Gundlach: As the next Federal Reserve chairman approaches, I think we will almost be in a situation of negative real interest rates."New Bond King" Gundlach: If long-term government bond interest rates are too high, yield curve control may be implemented.

Gold Price Prediction: The XAU/USD pair recovers towards the $1,930 barrier as the US Dollar retreats amid contradictory signals

Daniel Rogers

Jan 19, 2023 15:07

Gold price (XAU/USD) gains bids to trim yesterday's losses, breaking a three-day downtrend, as the US Dollar struggles to defend late Wednesday's corrective bounce off the lowest level since May 31, 2022. Recent remarks by Dallas Federal Reserve (Fed) President Lorie Logan could provide more support for the XAU/USD recovery.

 

In her maiden statement as a Fed representative, Fed's Logan advocated for a slower rate hike pace but also acknowledged the possibility of a higher stopping point, whereas the majority of Fed policymakers appeared bullish on Wednesday.

 

Previously, James Bullard, president of the Federal Reserve Bank of St. Louis, stated that US interest rates must increase further to reduce inflationary pressures. In the same vein, Loretta Mester, president of the Federal Reserve Bank of Cleveland, lauded the Fed's efforts to manage inflation. In addition, the president of the Kansas City Fed, Esther George, stated that the central bank must restore price stability, "which includes reverting to 2% inflation."

 

Notably, the disappointing US data allowed gold markets to restore upward momentum and challenge the Fed hawks. US Retail Sales had a 1.1% MoM decline in December, compared to market predictions of -0.8% and prior readings of -1.0%. This decline was the largest in a year (revised). On the same note, the Producer Price Index plummeted to its lowest level in six months with a -0.5% MoM figure, compared to a -0.1% MoM figure that was anticipated and a 0.2% MoM result from the previous month (revised).

 

In addition, the Bank of Japan's (BOJ) unexpected inaction and diminishing fears of the Federal Reserve's (Fed) aggressive monetary policy activities weighed on United States Treasury bond yields and the Gold price on Wednesday. In spite of the BOJ's inaction on monetary policy and interest rates, 10-year US Treasury bond yields reached their lowest level in four months as of press time, hovering around 3.37 percent.

 

Analysts at Goldman Sachs anticipated greater China development and preferred chances for a rise in energy demand from the dragon kingdom. However, elsewhere, contradictory concerns about China appeared to have hampered Gold purchases. In recent times, though, worries about the US-China friction have outweighed optimism. US Treasury Secretary Janet Yellen and Chinese Vice Premier Liu He met in Germany on Wednesday, which initially bolstered risk appetite with the BOJ's inactivity. However, the diplomats' mention of the disagreements sparked market fears of a new round of friction between the United States and China. Prior to this, the South China Morning Post (SCMP) stated that Beijing'should be cautious' as the United States and Taiwan seek stronger economic ties.

 

In light of these performances, markets remain cautiously hopeful on Thursday, resulting in a Gold price recovery. Mildly bid US stock futures, a weakening US Dollar Index (DXY), and declining US Treasury bond yields could be indicative of market sentiment.


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