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The yield on Japans two-year government bonds rose 0.5 basis points to 1.73%, the highest level since April 1995.Tensions in the Middle East escalated again over the weekend, causing a surge in crude oil prices this morning, which is expected to support a higher market opening this week. If the situation in the Middle East continues with both peace talks and conflict, the market is likely to continue consolidating at high levels this week.SoftBank Group shares fell about 4.8%, and Tokyo Electron shares fell more than 4%.On August 31st, Japans industrial production rose 0.1% month-on-month in July, better than the expected 0.7% decline; retail sales rose 2.4% month-on-month and 4% year-on-year, both significantly exceeding expectations. Manufacturers expect industrial production to grow by 6.4% in August, followed by a 4.2% decline in September. The much stronger-than-expected industrial production data mitigated some short-term downside risks priced into the markets assessment of Japans economic growth prospects. The sharp rebound in retail sales, both month-on-month and year-on-year, indicates that consumer spending performed better than suggested by the decline in June. This is significant for the Bank of Japans ongoing discussion on whether domestic demand can continue to drive inflation. The manufacturers survey indicates that industrial production is expected to grow strongly by 6.4% in August, but will decline significantly in September, suggesting that the current strong performance may be partly due to advance production or a rebound after a previous decline, rather than a genuine acceleration of the industrial cycle. According to the US financial website InvestingLive, combined with US Treasury Secretary Bessants recent remarks that the pace of interest rate hikes is effectively left to Bank of Japan Governor Kazuo Ueda, the resilience of economic growth and consumption further weakens the reasons for the Bank of Japan to postpone further tightening of its policy.The Nikkei 225 index opened down 731.46 points, or 1.10%, at 65,674.10 on Monday, August 31.

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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