MTS Help Center

Gold held steady on Wednesday after a sharp drop in the previous session, as investors looked for clues on the pace of tapering by the U.S. Federal Reserve at the end of a two-day policy meeting.

·         The U.S. central bank’s two-day monetary policy meeting is set to end later in the day, with investors expecting the Fed to announce a faster wind-down of asset purchases.

·         The European Central Bank, the Bank of England and the Bank of Japan are also scheduled to meet this week.

·         Bank of Japan Governor Haruhiko Kuroda said the country’s consumer inflation may approach 2% through various channels, reflecting recent increases in raw material costs.

·         British payrolls rose by a record 257,000 in November, underscoring the Bank of England’s dilemma as it meets on interest rates this week.

·         Wall Street ended lower on Tuesday after data showed producer prices increased more than expected in November, while the fast-spreading Omicron coronavirus variant also dampened investor sentiment.

 

·         Gold Price Forecast: XAU/USD to slide below support at $1,765 on a hawkish Fed

Heading into the Fed showdown on Wednesday, gold is licking its wounds around $1,770. Will XAU/USD defend critical $1,765 support following Fed's decision? As FXStreet’s Dhwani Mehta notes, If the decision disappoints the hawks, gold could bounce off from this support.

Gold in bearish consolidation phase amid cautious market mood

“Investors prefer to remain on the sidelines and refrain from creating any fresh positions in XAU/USD, as they await the announcement on the pace of Fed’s tapering, which may pave the way for a mid-2022 rate hike. In the meantime, the Omicron covid updates, dynamics of the yields and the greenback will be closely followed for gold’s price action.”

“Gold sellers now look to take out the strong rising trendline support at $1,765 on a hawkish Fed outcome. The December lows of $1,762 will be next on the sellers’ radars, with deeper declines eyed towards the November lows of $1,759.”

“If the decision disappoints the hawks, then XAU/USD could bounce off from the $1,765 demand area once again, bringing the 100-DMA barrier at $1,790 back into play.”

“Acceptance above the 100-DMA on a daily closing basis is needed to challenge the 21, 50 and 200-DMAs confluence around $1,795. The next bullish target is seen at the $1,800 mark, above which a rally towards the November 30 highs of $1,808 will be on the cards.”

 

·         Dollar holds firm as investors eye major Fed policy meeting

The dollar index was at 96.557, having gained 0.5% so far this week in choppy trading.

The euro last traded at $1.1265, not far from $1.1184 hit in November.

 

·         Two rather than three rate hikes in 2022 would give U.S. Fed more ‘leeway,’ says Standard Chartered

Manpreet Gill of Standard Chartered says the U.S. Federal Reserve is likely to perform a “balancing act” when it comes to the pace of interest rate hikes next year, and its decisions would depend on the state of inflation.

 

·         U.S. to add 8 Chinese companies to investment blacklist - FT

The United States will add eight Chinese companies, including the world’s largest commercial drone manufacturer DJI Technology Co Ltd, to an investment blacklist this week, the Financial Times reported on Wednesday.

The U.S. Treasury will put the companies on its “Chinese military-industrial complex companies” blacklist on Thursday because of their alleged involvement in surveillance of the Uyghur Muslim minority, the FT report said, citing two people briefed on the move.

 

·         It’s ‘game over’ for U.S.-listed Chinese companies, global asset manager says

Chinese companies listed on Wall Street will likely to be cut off from U.S. capital markets in the next three years as tensions between Beijing and Washington persist, says one global asset management firm.

“I think for a lot of Chinese companies listed in U.S. markets, it’s essentially game over,” David Loevinger, managing director for emerging markets sovereign research at TCW Group, told CNBC Wednesday. “This is an issue that’s been hanging out there for 20 years — we haven’t been able to solve it.”

He predicted that by 2024, most Chinese companies listed on U.S. exchanges are no longer going to be listed in the United States.

 

·         China’s retail sales grow by 3.9% in November — slower than expected

China’s retail sales missed expectations in November, while industrial production beat, according to data from the National Bureau of Statistics out Wednesday.

Retail sales for November grew by 3.9% from a year ago, below the 4.6% year-on-year rise forecast by a Reuters poll.

The miss came as auto sales have fallen in recent months, and despite China’s big Singles Day online shopping festival in early November.

Industrial production grew by 3.8% in November from a year ago, topping the poll’s 3.6% expectation.

Fixed asset investment for the year through November grew by 5.2% from the same period a year ago, slower than the poll’s forecast 5.4% gain.

Investment in manufacturing and real estate development grew for the first 11 months of the year from a year ago, but at a slower pace than the January to October period, the data showed.

Investment in manufacturing grew 13.7% in the January to November period, compared to a 14.2% increase in the first 10 months of 2021. Real estate investment grew by 6% in the January to November period, versus 7.2% growth in the first 10 months of this year.

 

·         UK inflation jumps to 10-year high of 5.1%

British consumer price inflation surged to its highest in more than 10 years in November, jumping to 5.1% from October's 4.2%, in news likely to unsettle the Bank of Englandas it considers whether to raise interest rates on Thursday.

Price pressure from a broad range of goods and services - but especially petrol, clothing and footwear - were responsible for the rise, the Office for National Statistics said.

·         Bank of England rejects major overhaul of cash system

The Bank of England has told top banks to spell out by March how they will keep enough cash in circulation as COVID-19 accelerates its decline, saying it won't create a new body for distributing notes and coins.

 

·         BOJ’s Kuroda says inflation may approach 2% target

Bank of Japan Governor Haruhiko Kuroda said on Wednesday consumer inflation may approach its 2% target on rising raw material costs, offering his clearest signal to date that upward price pressures will continue to broaden.

But he said the central bank would maintain its ultra-loose monetary policy to ensure any rise in prices would be accompanied by higher wages and a recovery in the economy.

Prime Minister Fumio Kishida earlier this month voiced concern the global rise in inflation "risks spreading to Japan."

Kuroda, however, brushed aside the chance the country will face an economic slump accompanied by higher inflation, saying he did not think Japan was in a state of stagflation.

 

·         Japan admits overstating some government economic data for years

The Japanese government overstated construction orders data received from builders for years, Prime Minister Fumio Kishida said on Wednesday, an admission that could dent credibility of official statistics widely used by investors and economists.

It was not clear why the government started the practice of rewriting the data. It is also unclear how gross domestic product (GDP) figures may have been affected, though analysts expected any impact to be minimal, particularly as the builders involved were likely to be smaller firms.

 

·         U.S. study suggests COVID-19 vaccines may be ineffective against Omicron without booster

·         UK to remove all countries from COVID travel red list on Wednesday

·         Italy extends COVID-19 state of emergency, imposes swab for EU visitors

·         4 charts show what the travel industry looks like 2 years into the Covid pandemic