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October 15th - EU leaders arrived at the venue on the morning of October 15th local time for the two-day EU summit in Brussels. The meeting was chaired by European Council President Costa, and attended by European Commission President Ursula von der Leyen, European Parliament President Michel Metzela, and leaders of the 27 EU member states. The leaders will discuss topics including EU competitiveness, energy prices, the EUs long-term budget for 2028-2034, support for Ukraine, security and defense, immigration, EU enlargement, and the situation in the Middle East.On October 15th, Barclays economists stated that comments by Bank of Japan (BOJ) policy board member Junko Koeda further reinforced the BOJs assessment that it needs to continue raising interest rates. In her remarks on Thursday, Koeda indicated that Japans neutral interest rate is likely "well above 1%," and that the neutral interest rate, estimated by adding a 2% inflation rate to the potential economic growth rate, may exceed 2%. Barclays economists stated, "We believe her mention of a neutral interest rate potentially exceeding 2% is significant when assessing the BOJs room for further rate hikes." Barclays expects the BOJ to raise interest rates by another 25 basis points in December 2026, followed by further increases in March and July 2027, ultimately raising the policy rate to the terminal level of 2%.STMicroelectronics, listed in Milan, resumed trading after a suspension, with its share price falling 7%.Ukraines state-owned oil company: Russia attacked a gas extraction facility in the Poltava region last night.Bank of England Monetary Policy Committee member Green: The risk of a second-order effect is “quite significant.”

Gold Price Prediction: XAU/USD anticipates additional gains ahead of China and U.S. inflation

Alina Haynes

Jan 11, 2023 11:54

Gold price (XAU/USD) demonstrates usual pre-data concern as it approaches $1,875 on Wednesday morning, exploring a three-day rally around the highest levels since May 2022. In doing so, gold demonstrates the market's faith in the traditional safe-haven, even if the US Dollar recovers from its multi-day low. The uncertainty surrounding the next steps of the US Federal Reserve (Fed) and the pessimistic economic forecasts of the World Bank (WB), not to mention cautious optimism towards China, may be to blame.

 

Federal Reserve (Fed) Chair Jerome Powell's remarks at Riksbank's International Symposium on Central Bank Independence were unable to provide additional clarification on the US central bank's monetary policy outlook, which prompted a stampede for gold in the face of uncertainty. In his most recent public appearances, the policymaker lauded the US central bank's latest steps while emphasizing the Fed's independence and lack of commitment to climate control. Notably, Federal Reserve Governor Michelle Bowman seemed hawkish when she stated that additional rate hikes are required to combat excessive inflation, which should have pressured the XAU/USD bulls in the aftermath.

 

Notably, the recent softening of hawkish bets on the Fed's next moves, as well as lower US data, appear to keep gold investors optimistic, despite the Federal Reserve's efforts to defend its tight monetary policy. Tuesday, the US NFIB Business Optimism Index for December fell to its lowest level since 2013 if various anxieties caused by the worldwide Covid wave are disregarded. In addition, US Wholesale Inventories for November stayed constant at 1.0% growth.

 

Alternatively, a rebound in the US Dollar Index (DXY) from the seven-month low appears to pose a threat to the Gold price, due to the inverse link between the XAU/USD and the dollar's index against the six main currencies. Tuesday marked the conclusion of a two-day downturn for the DXY as it rebounded from the multiday low to settle at 103.30. In doing so, the US Dollar Index tracked the firmer US 10-year Treasury note yields, which increased 10 basis points (bps) to 3.61 percent, falling one basis point (bp) to 3.60 percent at the latest.