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On October 16th, gold prices hit a new high of $4,226 in early trading, supported by concerns about trade tensions and market bets that the Federal Reserve will increase monetary easing before the end of the year. So far this week, gold prices have risen by over 5%, and the buying frenzy has also spread to other precious metals. Traders are heavily betting on at least one significant US interest rate cut before the end of the year, and Fed Chairman Powell hinted this week that the central bank will cut rates by another 25 basis points later this month. The ongoing US government shutdown also provided support for gold prices. Furthermore, the so-called "currency devaluation trade" is driving inflows into gold, with investors selling sovereign debt and currencies to hedge against the risks of widening fiscal deficits. Active gold purchases by central banks are a key support. Saad Rahim, chief economist at Trafigura Group, said that the gold rally is "primarily driven by physical buying. If you look at central banks, they are buying heavily."South Koreas chief presidential policy adviser expressed "optimism" when asked about US tariff negotiations.Honda Motor: Will make additional investment in California-based startup Helm.AI.ANZ Bank raised its gold price forecast to $4,400 an ounce by the end of this year, and expects it to peak at nearly $4,600 an ounce by June 2026.On October 16, the World Meteorological Organization (WMO) announced that atmospheric concentrations of carbon dioxide, methane, and nitrous oxide reached record highs in 2024. This phenomenon is attributed to continued human emissions of carbon dioxide and the frequent occurrence of wildfires. This, combined with the reduced absorption of carbon dioxide by carbon sinks such as terrestrial ecosystems and the oceans, could lead to a vicious cycle of climate change. WMO officials stated that the last time such high carbon dioxide concentrations were recorded in Earths history was approximately 3 to 5 million years ago, before the advent of humans.

Gold Price Prediction: XAU/USD surges above $2,010 as Fed policymakers anticipate a rapid decline in US Inflation

Daniel Rogers

Apr 12, 2023 13:41

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In the Asian session, the price of gold (XAU / USD) made a swift advance above the critical resistance of $2,010.00. The price of gold has risen above $2,013, as the US Dollar Index continues to weaken. (DXY). The USD Index has fallen to approximately 102.05 and is anticipated to accelerate its decline. Federal Reserve (Fed) policymakers anticipate a rapid deceleration in U.S. inflation, which has a negative influence on the USD Index.

 

Patrick Harker, president of the Federal Reserve Bank of Philadelphia, stated, "I am monitoring the data to determine if additional action on inflation is necessary." In addition, the president of the Minneapolis Fed Bank, Neel Kashkari, anticipates that inflation will be in the middle 3 percent by the end of this year and will be closer to 2 percent the following year.

 

Austan Goolsbee, president of the Chicago Fed, advocated a cautious approach in light of the fact that the confluence of constrained credit conditions and further restrictive monetary policy can impact sectors and regions differently than if monetary policy acted alone.

 

As the last inflation data before the Federal Reserve's scheduled interest rate decision in the first week of May, the US inflation data released on Wednesday will be closely monitored.

 

In addition, the Fed minutes will be scrutinized as they will provide a detailed explanation of the 25 basis point (bps) rate hike in March.

 

The demand for US government bonds appears to be subdued prior to the release of US inflation data. The yield on 10-year US Treasury bonds fluctuates around 3.43 percent.


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