Islam Saeed wrote Wednesday, June 28, 2023 11:00 pm
The current fluctuation in global gold prices comes in light of investors’ attempts to create a balance between fears of economic recession and the continued monetary tightening of central banks and raising interest rates, which resulted in the current fluctuation in gold without a clear direction, although the downward trend is currently predominant in the movement of gold.
This week, the core PCE data for the US economy will be released, which is the Fed’s favorite inflation indicator. Inflation is expected to continue at an annual level of 4.7% during the month of May, unchanged from the previous reading.
Although US inflation is expected to stabilize in May, it remains much higher than the Fed’s target of 2%, which prompts the Bank to adhere to the monetary tightening policy and continue to raise interest rates.
On the other hand, there will be an opportunity for the markets to hear ECB President Lagarde, along with Federal Reserve Chairman Jerome Powell and heads of other global central banks, in a panel discussion at the ECB’s annual forum in Sintra, Portugal, tomorrow, Wednesday.
Inflation is likely to be at the forefront of the topics during this forum, in addition to knowing the trends of the largest central banks in the world during the second half of the year.
The markets are currently pricing in an interest rate hike by the US Federal Reserve during the month of July by 25 basis points, with a probability of 77%, provided that interest rates start to decline starting next year gradually.
The yield on 10-year US government bonds rose today, after falling yesterday to its lowest level in 3 weeks, to rise today by 0.6% at the level of 3.744%, while the yield on two-year bonds declined today by 0.8%, to record the lowest level in a week at 3.744%. 4.668%.
Despite the current fluctuation in the yield on bonds, it remains near record levels, which negatively affects gold prices since the precious metal does not provide a return to its holders, which increases the opportunity cost of gold.
2023-06-28 20:00:00
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