A similar scenario could play out in the UK and the Eurozone. Their respective central banks are raising interest rates despite the growing risks to fragile growth.
Despite hawkish rate hikes by the US Federal Reserve and the European Central Bank, spot gold ended the week at $1793.30 with a slight loss of nearly 0.15%.
The US Dollar Index closed the week little changed at 104.84. Gold Benefits from Weak US Yields as US 10-Year Yield Falls 2.78% Over the Week to Close at 3.488% Despite Hawkish 50bps Raises by US Federal Reserve and European Central Bank I received
The US Federal Reserve has acknowledged that inflationary trends have slowed over the past few months. However, the bank argued that although the headline inflation rate of 7.1% (November) was lower than his forecast of 7.3% and the previous figure of 7.7% (October), the trend did not make much sense. . slightly above 2%.
The US Federal Reserve could ease its rate hike stance in the near term by forecasting a final rate of 5.1% (5.00-5.25% bracket) versus 4.6% (4.50-4.75% bracket) He practically denied sex. Scheduled for September.
The European Central Bank hikes the benchmark bank deposit rate by 50 basis points to 2%, as expected, with multiple hikes of 50 basis points by banks to prepare the market for a terminal rate of 4%. I was clearly hawkish in my prediction that it was likely.
Furthermore, the ECB will start quantitative tightening in February 2023.
U.S. Yields Disappointing Results in U.S. Retail Sales, Philadelphia Manufacturing, Industrial Production and S&P Global U.S. Manufacturing, Services and Composite Data Released Week Ending Dec. 16 decreased in
Investors are looking forward to major economic releases such as US GDP, housing and the Fed’s recommended inflation PCE price index next week.
Gold may test resistance at $1810/$1825 if US data doesn’t bring any big surprises next week.
However, investors should be aware of potential volatility stemming from low liquidity as traders cut back on activity heading into Christmas and New Year.
Support is seen in the $1750-1765 zone.
(Author is AVP, Fundamental Currency and Commodity Analyst at Sharekhan)
(Disclaimer: Professional recommendations, suggestions, views and opinions are their own and do not represent the views of The Economic Times)