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On August 21, analysts at Daiwa Capital Markets noted in a report that European Central Bank policymakers may have been somewhat relieved so far by the relatively limited indirect impact of the energy shock on other commodity prices. "Of course, the pressure is mainly concentrated in the early stages of the production chain and in industries most vulnerable to oil and gas prices," they stated. However, with wholesale oil and gas prices rising again in recent weeks, the risk of further exacerbation of the indirect transmission effect and a second round of price impacts lasting longer is also increasing.On August 21st, economists at Sumitomo Mitsui Nikko Securities stated that the Bank of Japan (BOJ) is likely to raise its policy rate from the current 1% to 1.25% at its next meeting in September. They noted that the BOJ is expected to raise rates again in January and June 2027, eventually reaching a policy rate of 1.75%. They added, "After next summer, import-driven inflationary pressures are expected to ease, making it unlikely that the BOJ will raise the policy rate to 2%—a level higher than the markets average estimate of the neutral rate." The overnight index swap market currently indicates an 84% probability of a BOJ rate hike in September, with two more hikes expected by early 2027.Russian Deputy Foreign Minister Ryabkov: Whats important now is how Washington can influence decision-making in Kyiv and Europe.Indias preliminary composite PMI for August was 54.6, below the expected 54.4 and the previous reading of 54.3.Indias preliminary services PMI for August was 54.5, below the expected 53.8 and the previous reading of 53.3.

Gold Price Prediction: XAU / USD will continue to fluctuate above $1,900 despite a decline in US Inflation

Daniel Rogers

Mar 15, 2023 11:43

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Gold price (XAU / USD) is not in danger despite U.S. inflation figures meeting expectations. Since Monday, the precious metal has been fluctuating continuously between $1,895 and $1,913. The release of the US Consumer Price Index (CPI) failed to produce a significant reaction in the Gold price; however, the upside bias appears to be solidified as wagers on lesser rate increases from the Federal Reserve (Fed) have increased.

 

The US Dollar Index (DXY) is protecting the critical support at 103.50, but it appears vulnerable to further losses as investors' risk appetite has dramatically increased. As market participants purchased S&P500 futures in response to higher odds of a smaller rate hike from Fed chair Jerome Powell, a likely recession in the US economy was postponed, signaling an uptick in optimism.

 

Contrary to the risk-on sentiment, demand for US Treasury bonds remained weak, causing 10-year US Treasury yields to rise above 3.68 percent.

 

The headline As anticipated, the US CPI increased by 0.4% on a monthly basis, and the annual figure decreased from 6.4% to 6.0%. In addition, the core CPI, which excludes crude and food prices, decreased to 5.5% from 5.6% previously. The Fed appears to be pleased with the persistence of a declining trend in US inflation.

 

In the future, investors will closely monitor the US Retail Sales (Feb) data. Monthly Retail Sales data is anticipated to decline by 0.3% compared to the previous release of a 3.0% increase. This indicates that the consumer spending rebound is over and the Fed is on course to achieve its inflation target of 2%.

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