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Futures Commentary by Everbright Futures: Overnight, COMEX gold weakened amid fluctuations. After opening today, overseas gold prices rebounded somewhat, with a gain of approximately 0.45% as of this writing. Market sentiment remains volatile. 1. On the policy front, the remarks made by Federal Reserve Chair nominee Warsh at his Senate confirmation hearing last night exerted some downward pressure on gold prices. Warsh stated that he is "committed to ensuring that the implementation of monetary policy remains strictly independent," emphasizing that interest rate decisions "must be strictly independent of political considerations," and pointing out that Trump never asked him to commit to rate cuts. The market interpreted this statement as a hawkish signal, coupled with his call for a "new inflation framework and communication method" from the Fed, further strengthening market expectations that monetary policy is unlikely to shift to easing in the short term, thus putting pressure on gold. 2. On the geopolitical front, a dramatic reversal occurred. Earlier today, Trump publicly stated that he did not intend to extend the ceasefire agreement between the US and Iran, which expires on the evening of the 22nd, and threatened to resume bombings against Iran after the ceasefire expires, triggering a rise in market risk aversion. However, hours later, Trump announced on social media that, at Pakistans request, he agreed to extend the ceasefire, pending Irans submission of a negotiating proposal. He also instructed the US military to continue its naval blockade of Iran and maintain a state of readiness. This fluctuating stance caused market sentiment to waver. 3. In summary, the obstruction of navigation in the Strait of Hormuz pushed up oil prices and inflation expectations, coupled with persistent expectations of Fed tightening, becoming the core factor suppressing gold prices. The US-Iran negotiations have been repeatedly uncertain, increasing short-term market divergence. Before the negotiations become clearer, traders are advised to control their positions and wait for confirmation of direction. However, given the current US stance of still favoring a negotiated solution, traders may consider buying on dips during periods of volatility.Market news: Japans finance minister will meet with the banking sector to discuss the threat posed by Anthropics Mythos model.On April 22, the highest 7-day annualized yield of Tencent Wealth Managements "Current Account +" was 1.3380%, and the lowest was 0.8440%. The highest 7-day annualized yield of WeChat Pays "Lingqian Tong" was 1.0670%, and the lowest was 1.0030%. The highest 7-day annualized yield of Alipays "Yuebao" was 1.1550%, and the lowest was 1.0000%.Boeing has begun formal certification testing of the engine anti-icing design repair for its 737 MAX series aircraft.Hong Kong-listed AI concept stocks fell in early trading, with Paradigm Intelligence (06682.HK) down 10.38%, Kingsoft Cloud (03896.HK) down 4.67%, and Qunhe Technology (00068.HK) down 2.54%.

WTI crude oil drifts above $80.00 amidst a US Dollar rebound and supply shortage concerns

Alina Haynes

Apr 10, 2023 14:16

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In the early hours of Monday, purchasers of WTI crude oil struggled to maintain the price above $80.70 as risk aversion and hawkish Fed forecasts bolstered the US Dollar. However, threats to Oil supplies, primarily emanating from China and OPEC+, appear to keep purchasers of black gold optimistic.

 

US Dollar Index (DXY) reverses a four-day downtrend near 102.25 despite the inability of US Treasury bond yields to recover due to recession concerns. However, US 10-year and 2-year Treasury bond yields remain under pressure near 3.37 percent and 3.95 percent, respectively. In doing so, the benchmark bond coupons extend the previous day's losses and illustrate the market's flight to protection in response to concerns of an economic decline.

 

In spite of this, the recent disappointing US data reignite concerns of a recession in the world's largest economy and challenge the optimists in the energy sector. However, the positive US Nonfarm Payrolls (NFP) data enabled Fed hawks to return to the table and renew demands for a 0.25 percentage point rate hike in May. The same constrains the value of the US dollar and stimulates demand for WTI crude oil.

 

On the other hand, geopolitical concerns surrounding China, particularly after the dragon nation's military exercises near Taiwan, combine with last week's unexpected OPEC+ production cut to keep Oil purchasers optimistic.

 

China's willingness to defend the global economy through robust monetary and fiscal easing at home also enables Oil purchasers to maintain optimism in the face of optimism among the world's largest Oil consumers.

 

The Easter Monday holiday in spot markets may limit Oil price movements, but the investors appear to be out of steam, so US inflation and Fed Minutes will be closely monitored for signs of a pullback.


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