© Reuters.
Investing.com – Wednesday was up sharply as the master currency fell to near 110 levels amid growing expectations that the pace of tightening by the US Federal Reserve would ease.
It came to you concurrently with a press release according to a Wall Street Journal report last weekend that a Fed official is considering easing market fears about the impending hike.
This comes in conjunction with warnings from international banks and banking experts about the need for the Federal Reserve to halt the unprecedented wave of tightening that is plunging the American and global economy into sharp recession.
gold now
The price of spot gold contracts, the US dollar, jumped in these trading moments today, Wednesday, by more than $ 17, reaching levels of $ 1,671.61 an ounce, an increase of more than $ 1. %.
The current levels are the highest for gold since trading on October 14, while the difference in volatility between today’s high and low prices is over $ 22.
In the futures market the safe haven was up more than 1.2% in these trading times today, Wednesday, hitting levels close to $ 1680 an ounce, with gains exceeding $ 20 an ounce.
The dollar is falling
On the other hand, gold’s gains resulted in the sharp drop in the dollar’s leading index against a basket of currencies, as the leading index fell close to its lowest level in 3 weeks, especially since trading on the 5 October.
The main fell during these trading moments today, Wednesday, by 0.8%, falling to levels close to 110 points, while the highest level reached 111.14 points.
At the same time, the decline in yields has widened from the 2008 peak to 4.3%, while the yield on 10-year bonds has now reached levels close to 4%.
what happened?
Gold prices rose at the end of trading on Tuesday, buoyed by weak dollar and US bond yields, after weak US economic data raised hopes that the Federal Reserve may begin to slow monetary policy tightening in the year. course of the year.
At the close of the session on Tuesday, the price of the gold futures contract – delivery in December of 0.2%, to 1658.40 dollars an ounce, the price of the spot delivery of the yellow metal increased by 0.3%, at $ 1,654.34 an ounce.
Gold prices closed trading on Monday with a decline for the first time in 3 consecutive sessions, as the dollar and US equities rose.
Federal Directorates
The market believes the US Federal Reserve is nearing the end of the strong part of its rate hike cycle, said Stephen Innes, managing partner of SBI Asset Management.
“Once US bond yields and the dollar start to drop significantly, that should be very positive for gold,” Reuters added.
The Standard & Poor’s Global survey showed that commercial activity in the United States contracted for the fourth straight month in October, the latest evidence of the economy’s weakness in the face of rising inflation and rising interest rates.
The US central bank looks set to raise interest rates by 75 basis points at its next policy meeting, as policy makers are seen discussing the magnitude of future hikes.
Most economists surveyed by Reuters predicted a 50 basis point increase in December, and although gold is seen as a hedge against inflation, higher interest rates increase the opportunity cost of holding zero-yield bullion, increasing at the same time the yields of the dollar and bonds.
distress calls
Mohamed El-Erian, chief economic advisor to Allianz (TADAWUL 🙂 warned that the Federal Reserve faces three problems: growth, inflation and financial stability, and not just inflation, by expecting the central bank to slow the pace of rising interest rates to prevent a crisis in the financial system.
US finance professor Jeremy Siegel of the Wharton School expected a 75 basis point interest rate hike from the Federal Reserve in November, followed by a 50 basis point hike in December, although he does not see the need for such hikes. noting that a great deal of progress has been made in inflation mode.
On Tuesday, major Wall Street bankers renewed their warnings about the global economy amid geopolitical tensions and steep interest rate hikes to counter decades of high inflation.
Goldman Sachs (NYSE 🙂 chairman David Solomon said that economic conditions “would tighten significantly from here” and the US Federal Reserve could raise interest rates beyond 4.5-4.75% if it didn’t see real changes in behavior.
“If they don’t see real changes – the business is still very tight – they are clearly just playing with the shrinking demand side,” added the Goldman Sachs boss.
Speaking at a major Saudi investment conference in Riyadh, Jamie Dimon, CEO of JPMorgan (NYSE 🙂 Chase, said it is difficult to get out of “latent inflation” without an economic slowdown.
GB Bank (EGX 🙂 CEO Morgan Chase added that the 40-year decoupling process of “nationalized fixed income markets” is “disabled” and Dimon said the conflict between Russia and Ukraine and US-China tensions they are more concerning than a possible recession in the United States.
