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1. The three major U.S. stock indexes closed mixed. The Dow Jones Industrial Average fell 0.07% to 47,850.94 points, the S&P 500 rose 0.11% to 6,857.12 points, and the Nasdaq Composite rose 0.22% to 23,505.14 points. 3M Inc. fell more than 2%, and UnitedHealth Group fell nearly 2%, leading the decline in the Dow Jones. The Wind U.S. Tech Big Seven Index rose 0.4%, Facebook rose more than 3%, and Nvidia rose more than 2%. Chinese concept stocks were mixed, with Wanwu New Energy rising nearly 9% and Daqo New Energy falling nearly 3%. Market sentiment was cautious ahead of the Federal Reserves monetary policy meeting next week. 2. European stock markets closed higher across the board. The German DAX index rose 0.87% to 23,899.33 points, the French CAC40 index rose 0.43% to 8,122.03 points, and the UK FTSE 100 index rose 0.19% to 9,710.87 points. Boosted by positive US ADP employment data and expectations of interest rate cuts, global risk sentiment improved, with strong performances in German auto stocks and French technology stocks driving the market upward. 3. US Treasury yields rose across the board. The 2-year Treasury yield rose 3.71 basis points to 3.521%, the 3-year Treasury yield rose 4.78 basis points to 3.545%, the 5-year Treasury yield rose 4.51 basis points to 3.673%, the 10-year Treasury yield rose 3.48 basis points to 4.098%, and the 30-year Treasury yield rose 2.39 basis points to 4.755%. 4. The WTI crude oil futures contract closed up 1.27% at $59.7 per barrel; the Brent crude oil futures contract rose 1.04% to $63.32 per barrel. 5. International precious metals futures closed mixed. COMEX gold futures rose 0.13% to $4237.9 per ounce, while COMEX silver futures fell 1.86% to $57.53 per ounce. White House officials hinted at a possible interest rate cut, reducing the opportunity cost of holding gold. EU policy adjustments and the US adding silver to its list of critical minerals impacted market demand for safe-haven assets. 6. London base metals traded mixed. LME lead rose 0.85% to $2016.00/ton, LME zinc rose 0.65% to $3085.00/ton, LME nickel rose 0.08% to $14885.00/ton, LME aluminum fell 0.33% to $2887.50/ton, LME copper fell 0.47% to $11434.00/ton, and LME tin fell 0.59% to $40540.00/ton. Commodity trader Mercuria plans to withdraw more than 40,000 tons of copper from LMEs Asian warehouses.South Koreas unadjusted current account balance for October was $6.81 billion, compared to $13.4674 billion in the previous month.According to Asahi Shimbun, Japanese Defense Minister Shinjiro Koizumi will visit the United States in early January.U.S. Trade Representative Greer: The U.S.-Mexico-Canada Agreement had some problems, and some of those problems have been addressed.The Federal Reserve stated that the changes could include a significant reduction in checking services, or a substantial, gradual reduction in checking services, thereby lowering operating costs.

Gold Price Prediction: XAU/USD bears anticipate a Fed rate hike near $1,660

Alina Haynes

Sep 21, 2022 14:35

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Wednesday's Asian session gold price (XAU/USD) reflects pre-Fed nervousness as bears flirt with $1,665 inside an immediate trading range. In addition to geopolitical concerns, the hawkish Fed bets create downward pressure on the metal. However, the market's consolidation prior to significant central bank announcements and the already-priced 0.75 basis point Fed rate hike appear to be testing the bears.

 

Reuters reported that the Federal Reserve began a two-day meeting on Tuesday, with rate futures traders pricing in an 83% chance of a 75 basis point raise and a 17% possibility of a 100 basis point tightening. The news adds to rising expectations that a positive surprise will weigh on the XAU/USD exchange rate. The previous day, global economist Nouriel Roubini endorsed metal bears and joined the band of supporters for the Fed's 1% rate hike.

 

In addition, the news of a sudden shutdown in the steel center of Tangshan due to China's zero covid policy recently rocked market confidence and boosted demand for the US dollar. In a similar vein might be the revelation that US Senators are seeking secondary sanctions on Russian oil.

 

In addition, the Asian Development Bank (ADB) lowered its growth predictions for emerging Asia in 2022 and 2023 on Wednesday, citing growing risks from increased central bank monetary tightening, the consequences from the conflict in Ukraine, and COVID-19 lockdowns in China. The news exerts a downward impact on mood and the XAU/USD exchange rate.

 

Regarding US statistics, the yields appeared to support DXY bulls on the back of generally positive US housing data. The nine-month decline in the US NAHB Housing Market Index preceded the August decrease in Building Permits to 1.517M from 1.61M expected and 1.68M previously. However, Housing Starts increased to 1.575 million compared to the market consensus of 1.445 million and previous readings of 1.404 million.

 

During the pre-Fed period of apprehension, the 2-year US Treasury yield reached its highest level in 15 years, while the 10-year yield reached its highest level in 11 years. Consequently, Wall Street's benchmarks closed in the negative, while the S&P 500 Futures remain undecided.

 

While the market's hesitation is mostly attributable to pre-Fed jitters, other central banks are also scheduled to influence the markets and gold prices. However, the focus will be on their ability to prevent recession while attempting to control inflation. If the Fed can persuade optimists of their capacity, a XAU/USD comeback cannot be counted out.


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