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Market research and intelligence firm IIR: Middle Eastern oil refineries have reduced refining capacity by approximately 1.9 million barrels per day.On March 10th, Bank of America stated in a report that while the market currently views rising oil prices as a greater threat to inflation, supply shocks actually pose a risk to both sides of the Federal Reserves dual mandate. The report points out that monetary policy tends to tighten only when consumer demand is strong enough and economic activity can withstand supply shocks, allowing the Fed to focus on inflation as it did during the 2022 Russia-Ukraine conflict. However, the bank notes that at that time, economic demand was significantly stronger (unemployment rate at 4%, core PCE inflation exceeding 5%, non-farm payrolls increasing by 500,000 per month, and consumers still having substantial stimulus funds). Currently, job growth is slower, inflation is moderately high, and fiscal stimulus is more limited. The bank believes that if the oil price shock persists, it will create conditions for the Fed to implement a more accommodative monetary policy.Iraq says it is trying to resume Kirkuk crude oil shipments, and Iraq’s daily oil production has fallen to 1.2 million barrels.Market news: U.S. Senate Democrats warned that Treasury Secretary Bessenters term as acting IRS commissioner has expired.On March 10th, Morgan Stanleys Bruna Skarica stated in a report that the Bank of England may cut interest rates in April if global energy supply disruptions are resolved in the near future. The Middle East war and rising energy prices have reignited inflation concerns, leading to lower market expectations for a March rate cut by the Bank of England. LSEG data shows that the money market currently prices in a 15% probability of a March rate cut and a 36% probability of a rate cut in April. Morgan Stanley previously predicted rate cuts in March, July, and November, but has now revised its forecast to April, November, and February of the following year, provided that energy supply disruptions are not prolonged.

Gold Price Prediction: XAU/USD oscillates about $1,650 as DXY recovers recent losses

Alina Haynes

Oct 25, 2022 15:24

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Gold price (XAU/USD) is indecisive while rebounding from intraday lows to $1,650 ahead of Tuesday's European session.

 

Nevertheless, the yellow metal attracted purchasers earlier in the day due to a weaker U.S. dollar, but the currency's recent resurgence looks to have weighed on the price recently. It should be mentioned that unfavorable concerns regarding China, one of the world's largest gold consumers, have recently posed a threat to the pricing of precious metals.

 

In the absence of Fed-speak, the US Dollar Index (DXY) gains bids to reclaim the 112.00 mark while trimming its first weekly loss in three weeks. It should be emphasized that the Fed's aggressive rhetoric and weak US PMIs also support the DXY's safe-haven appeal.

 

China's efforts to protect its struggling economy and worldwide pessimism regarding Xi Jinping's third term, not to mention Hang Seng's decline to a 13-year low, impose downward pressure on market mood and the XAU/USD exchange rate.

 

US 10-year Treasury rates continue under pressure around 4.21 percent, down two basis points (bps), while US stock futures and Asia-Pacific markets are moderately bid.

 

Moving forward, second-tier US Housing data and Consumer Confidence indicators may delight gold speculators before Thursday's third-quarter US Gross Domestic Product report (Q3).

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