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On May 27, it was reported that US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu spoke by phone on May 26 local time. An informed source stated that the two sides discussed the situation amidst regional tensions and as US-Iran diplomatic negotiations entered a crucial phase.On May 27th, according to Nikkei, Federal Reserve Chairman Neel Kashkari stated that the Fed may take a "series" of interest rate hikes to address inflation caused by the Middle East situation. During the FOMC meeting in late April, the Fed kept interest rates unchanged. Kashkari and two other officials objected to the Feds decision to include language in its statement hinting at future monetary easing. In a written interview, Kashkari stated, "I think the next rate adjustment could be a rate cut, or it could be a rate hike," expressing his differing opinion. Kashkari said the outcome depends on the trend of inflation, which in turn depends on whether the Strait of Hormuz reopens soon or remains effectively closed due to further damage to the regions infrastructure, the latter exacerbating the global energy shortage. Kashkari expressed concern that long-term inflation expectations for businesses and households "could get out of control." He stated that the FOMC "will likely need to take strong measures," and that rate hikes, or even a series of rate hikes, may be necessary.Federal Reserves Kashkari: A protracted war with Iran could trigger a "series" of interest rate hikes in the United States.May 27th - As of 2:30 PM closing, the Shanghai Gold futures contract fell 1.15% to 988 yuan/gram, the Shanghai Silver futures contract fell 1.38% to 18,601 yuan/kilogram, and the SC Crude Oil futures contract rose 0.81% to 610 yuan/barrel.Micron Technology (MU.O) surged over 20%, marking its biggest single-day gain since 2011.

Gold Price Prediction: XAU/USD is poised to break below $1,950 as the USD Index reaches a new weekly high

Alina Haynes

Apr 03, 2023 14:13

After a massive sell-off during the Asian session, the gold price (XAU / USD) is hovering close to $1,950. The price of gold is expected to continue to decline as concerns of a resurgence in U.S. inflation are rekindled by higher crude prices following the decision of OPEC+ to reduce production. The Producer Price Index will increase as a result of factory proprietors increasing the prices of products and services at factory gates in response to higher oil prices. (PPI). Eventually, inflationary pressures in the United States would increase significantly.

 

The US Dollar Index has been invigorated by the environment of rising inflation expectations. (DXY). Investors believe that the Federal Reserve (Fed) will have no choice but to raise interest rates, which has caused the USD Index to reclaim its weekly high above 103.00. In May, Fed Chair Jerome Powell may announce an additional 25 basis point (bps) rate increase, which will drive interest rates above 5%.

 

The abatement of US banking worries is another factor that has a significant impact on the gold price. Investors have digested the short-term hysteria caused by the failure of three mid-sized banks, and they anticipate no further casualties in the near future.

 

The inability of S&P500 futures to recover losses from the morning session is due to the likelihood that higher oil prices will result in higher operating costs for oil-dependent companies. The alpha produced by 10-year U.S. Treasury yields has surpassed 3.52 percent.

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