© Reuters.
Investing.com – Prices fell and the dollar index rose today, Wednesday, as US officials renewed talk of the need for a stronger pace to curb inflation, to renew concerns.
And renewed hopes for the US dollar to return to the rise and recover the bullish trend after a wave of declines that pushed the US currency index to its lowest level in more than eight months.
And after the release of US inflation data yesterday, Tuesday, which came in contradiction to expectations, the US Federal Reserve hawks set out to stress the need to continue working on raising interest rates to curb inflation.
As part of a strategy aimed at reducing dependence on the dollar, especially after the US debt ceiling crisis, the Chinese dragon, the second largest economy in the world, began to increase its reserves non-stop. Will gold succeed in immunizing China from what it fears? Who will win gold or the dollar?
These and other questions will be answered in the following video.
gold today
Futures prices for the yellow metal fell in early trading, today, Wednesday, within the range of $ 21, or the equivalent of 1.1%, to levels near $ 1845 an ounce, which is the lowest since last January 5.
It fell in spot contracts during trading today, Wednesday, within the range of $20, down 1.1%, down to $1834 an ounce.
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dollar today
The American dollar rose during early trading today against a basket of currencies, heading towards its highest level in more than a month, which it recorded on January 5th.
The US currency increased during trading today, Wednesday, against a basket of 6 major currencies, within the range of 0.35%, to 103.55 points.
On the other hand, the 10-year return decreased to 0.0115 points, to 3.74%.
Go beyond fears
The Richmond Fed president said the central bank still needs to prioritize curbing inflation over the risks to economic growth that could result from raising interest rates.
The Richmond Fed president stressed that it will take some time for inflation to slow down near the central bank’s 2% target.
Barkin added: “Inflation is returning to normal but it’s slowly coming down. I think there will be a lot more tightening and continuity than we all want.”
More lift than expected
The Dallas Fed president said the central bank will need to continue raising interest rates gradually to beat inflation.
“We must remain prepared to continue raising interest rates for longer than previously thought,” added Lori Logan.
“We must be flexible and tighten additionally if changes in the economic outlook or financial conditions warrant,” Logan said.
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restricted rates
The head of the Federal Reserve Bank of Philadelphia said the central bank still has more work to do to bring down inflation levels, though it is getting close to appropriately constrained interest rates.
“In my view, we’re not done tightening yet, but we’re getting close, at some point this year,” Patrick Harker added.
The President of the Federal Reserve Bank of Philadelphia “expected that the policy rate should be constrained enough to keep rates steady and allow monetary policy to do its work.”
“Rates are now at a level that allows us to slow our pace and proceed cautiously,” Harker said. “I think the times of 75 basis point hikes are over.”
Biden asks for more action
US President Joe Biden said that recent inflation data shows the continued need for more action, despite the fact that it reflects some improvement.
The US president stated that inflation data confirms that the US administration has achieved a historical improvement and is on the right path, but now it needs to finish the work.
interest forecast
Financial market expectations indicate that the interest range will reach 5% and 5.25%, compared to the current level between 4.5% and 4.75%.
The Federal Reserve raised interest rates 8 times in a row, to reach the range of 4.5% and 4.75%, compared to the level near zero last March.
Markets are currently pricing interest rates in the range of 5% and 5.25%, compared to the current level between 4.5% and 4.75%.
This comes after the Fed raised interest rates 8 times in a row, to reach the range of 4.5% and 4.75%, compared to the near-zero level last March.
Inflation exceeds expectations
Inflation in the United States rose more than expected in the first month of 2023, in a sign of persistent inflationary pressures that may prompt the Federal Reserve to raise interest rates higher than expected.
The data showed that the consumer price index increased by 0.5% in January on an annual basis, supported by gasoline and housing costs, while it was expected to rise by 0.4%.
On the other hand, on an annual basis, consumer prices increased by 6.4% in January, compared to expectations of 6.2%.
The core CPI – which excludes food and fuel costs – rose 0.4% last month, and about 5.6% year-on-year.
