BBI INFO
1. an overview of the market shows that the rise in U.S. bond rates has dampened the price of spot gold. Gold once dropped below $1,900, to $1,895.28 per ounce; it later regained some of that territory but couldn’t maintain its four-game winning run. Gold dropped to $1903.86/oz at market closure, a drop of 0.51%. During the period, spot silver prices dropped as low as $21.47 per ounce, eventually settling down 0.52% at $21.68.
2. The U.S. Consumer Price Index increased by 0.4% from the previous month and by 6.0% from the previous year in February, which was in accordance with forecasts. Biden then assured the public that they would not be abandoned in their pursuit of lower prices for consumers.
3. according to the Russian Ministry of Defense, no American drones were damaged by Russian combat aircraft.
According to the United States’ military, a Russian fighter aircraft fired down a U.S. drone over the Black Sea. Russia insists the UAV’s beacon was on and that American manoeuvring caused it to lose control, but both claims were refuted by American officials. Face-to-face attractiveness. Then, eight lawmakers from the United States pushed the Defense Department to give Ukraine F-16 fighter aircraft.
4. Unrest at Silicon Valley Bank persists
U.S. Senate Banking Committee Chairman Tom Coburn has called on the Federal Reserve to increase bank oversight and halt interest rate increases, while U.S. Democrats want to add more banks to the list of “too big to fail” standards to avoid a recurrence of the SVB incident. The Justice Department and the SEC are looking into the reports and managerial transactions of Silicon Valley Bank, while the United States is requesting indications of interest in the selling of Signature Bank.
5. Credit Suisse reported that it had found “significant deficiencies” in its filing processes for fiscal years 2022 and 2021, and that it was working to fix them.
6. U.S. finance, according to Federal Reserve Governor Bowman, has proven to be robust and stable.
7. The Silicon Valley Bank’s information sharing and CEO deals are reportedly being looked into by the U.S. Department of Justice and the U.S. Securities and Exchange Commission, as reported by the Wall Street Journal.
8. according to Moody’s, the working climate of the US financial system has “accelerated” and the prognosis has become negative. In the baseline scenario, the Fed maintains its current course of action, which could make problems for some U.S. institutions even more acute.
MARKET VIEWPOINTS
According to Ed Moya, an expert at OANDA,
Due to market concerns over rising inflation, gold prices have fallen.
Inflation statistics released last night still warrants the Federal Reserve to raise interest rates by another 25 basis points. The market seems to be fixated on a sharp increase in house values, even though this number is generally anticipated to decrease in the future, because housing costs account for 70% of inflation. Both salary constraints and price increases for services seem likely to continue. Optimism regarding the Federal Reserve’s ability to halt rate increases is low in light of the uptick in super core inflation over the past month.
With concerns about the economy’s security decreasing, bank shares have been on the rise, and attention on Wall Street appears to be shifting back to inflation. Ahead of the upcoming March meeting, inflation is still the most significant factor, which could lend support to more cautious policymaking. Even if the Fed only raises rates by 25 basis points in March, it will send a message that the war on inflation is far from over. Gold’s price drop has coincided with a rise in bond rates in the United States. U.S. Treasuries are moving in an extremely erratic direction. Gold lost ground as yields, particularly short-term yields, increased. Gold, however, should be able to hold steady at $1900 so long as the PPI data is not too robust.
Gary Wagner, expert at Kitco
Still, $1900 in gold is safe.
The Consumer Price Index report released last night confirmed that inflation remains an issue, with some regions showing particularly persistent inflation. Overall, inflation remained moderate in February, with the Consumer Price Index (CPI) monthly rate dropping from 0.5% in January to 0.4% in February and the yearly rate dropping from 6.4% in January to 6% in February. The annual rate of increase in core prices was 5.5% in February, down slightly from the 5.6% increase seen in January. More than 70 percent of the February CPI rise was attributable to housing-related costs. Due to this, the Federal Reserve may decide to increase its target interest rate by 25 basis points at its March meeting. Through it all, the Fed has been divided between bringing inflation under control and preventing a recession by raising interest rates (which has the effect of shrinking the economy). The financial crisis that has been brewing over the past week has made it even more challenging for the Fed to bring inflation down to target levels without sending the economy into a recession, making a “soft landing” by the Fed increasingly unlikely. As the Fed continues to increase interest rates, investors have become pessimistic about the value of gold because it does not produce interest. Higher inflation, however, had the reverse impact, increasing optimism in the gold market. Gold prices respond to both rising inflation and rising interest rates, with the former driving gold prices higher and the latter drawing gold prices lower. Gold prices, however, should maintain above the highly significant $1,900 mark. (Keep in mind that the futures price of gold is currently about $4 greater than the market price.)
The Latest Business Research From Bloomberg
After a Monday increase to $1920, market gold has remained consistently above the $2,000 level. Safe-haven buying has boosted gold’s price since the Silicon Valley Bank episode escalated. The bond market’s recent signals suggest the tightening cycle may be nearing its end, but this is not the primary factor.
Banking problem coincides with economic downturn; Fed may have finished tightening cycle. After ending a week prior at 5.26%, the highest level since 2007, one-year fed funds futures indicated rates dropped below 4% on March 13. With the macroeconomic climate shifting, gold is set to reach new record highs. Gold prices could be following the same trajectory as they did in 2018, with new highs of $2,060 possible given the present market environment. As the prognosis for economic development dims, the Federal Reserve may be unable to strengthen monetary policy any further due to declining product prices. The Bloomberg Commodity Spot Index was down around 20% year-over-year as of March 13th, and the Fed has not maintained its tightening cycle in such a constrained climate (likely to show up in the first quarter) since 1969. As a result, the yield curve showed the likelihood of an economic decline was at its greatest level since 1982. With the Fed’s newfound leniency being the primary impetus for gold purchases, we may see a repeat of the trend seen after the market bottomed in 2008, with gold prices rising relative to the Bloomberg Commodity Spot Index.
T.D. Securities
In the second half of the year, the long-term positive forecast for gold will increase above $1,925. Market conditions support gold in the long term, and the present elevated interest rates and higher financial risk should decelerate the US economy quicker. Recent gold price action indicates the market is more concerned with the long-term scenario and when the Fed will demonstrate a more dovish policy, rather than terminal interest rate increases as we near the top of the fed funds rate and the Fed’s shift may be pushed forward. The scheduling of the Fed’s rate reduction is a major factor in the markets at the moment, along with inflation rates, salary growth, and other economic statistics. There is a substantial possibility that gold costs will increase to over $1,925 by the end of the year.
