US inflation Archives -

Gold Resumes Its Gains as Middle East Tensions Offset High Inflation: The price of gold is turning towards an increase again,
addressing the effects resulting from regional tensions and the repercussions of inflation in the United States.
Gold, considered a haven, is experiencing increased demand in light of expectations for security incidents against
targets in Israel that Iran may carry out, as the outcomes of US inflation exceed expectations.

Content

Escalation of Geopolitical Tensions

US Inflation Data

Commodities Volatility

Escalation of Geopolitical Tensions

The price of gold is resuming its rapid increase,
surpassing the concerns that the US Federal Reserve might decrease interest rates
by less than expected this year, due to the escalation of tensions in the Middle East.
The United States and its allies are anticipating the possibility that Iran or its proxies
might launch significant attacks using missiles or drones on military and government targets in Israel.
This could represent a significant expansion of the conflict that has been ongoing for 6 months,
according to sources familiar with the intelligence information.
Typically, the demand for gold as a safe haven increases
during rising geopolitical tensions, as investors seek secure investments.

US Inflation Data

Gold saw a significant drop on Wednesday, the largest in nearly a month, following the release
US inflation data that came in higher than expected prompted traders
to reassess their expectations for interest rate cuts within the year.
s are still close to the record high they reached last Tuesday, supported by increased purchases by central banks.
In their discussions with Bloomberg, investment fund managers expect the current increase in the price of gold,
about 20% since mid-February, to lead to further increases.
They base their strategies on analyzing the impact of political and economic events on the market.

Commodities Volatility

Spot gold prices increased 0.3%, reaching $2,341.58 per ounce.
The Bloomberg dollar index remained unchanged, staying close to its highest levels since last November.
Meanwhile, silver prices stabilized after reaching a three-year high.
Platinum and palladium prices also increased.

Gold Resumes Its Gains as Middle East Tensions Offset High Inflation

Geopolitical Tensions critical factor influencing financial markets: In the ever-changing landscape of global affairs,
the intensification of geopolitical tensions has become a critical factor influencing financial markets.
This report examines recent developments, focusing on the escalating crisis in the Red Sea region
the Houthi rebels and its potential impact on various market sectors.

Topics

Geopolitical tensions pressure on the markets

Continuing pressures and their impact on oil

The impact of Red Sea tensions on gold

Australian Inflation

Australian Central Bank

Upcoming US inflation data

The next reduction

Powell’s unenviable position

Geopolitical tensions pressure on the markets

The US Central Command reported on the X website (formerly Twitter) that the Houthis shot down about 18 drones,
two unmanned cruise missiles, and a ballistic missile.

Indicating that the worsening crisis is continuing, which may increase pressure on the markets,
and oil is the most affected by the ongoing conflict, especially after many shipping companies changed their
route from the Red Sea to turning around the continent of Africa.

Continuing pressures and their impact on oil

In light of the continuing crisis and the Houthis’ control over the navigational course of the Bab al-Mandab Strait,
this may lead to a shortage of oil supplies, which may lead to a shortage of supply in the markets,
which may push oil prices to rise again.

The impact of Red Sea tensions on gold

It is unlikely that the geopolitical tensions taking place in the Red Sea will affect the haven,
especially since the damage is concentrated in the weak navigational movement of commercial ships.
The impact will likely be greater on commodities, especially oil.

Australian Inflation

Australian inflation is declining, a sign of the success of monetary tightening on the small continent

At the beginning of Wednesday’s trading, the markets witnessed important data from Australia and Australian consumer price data on an annual basis,
which was around 4.9%, and experts were expecting 4.4%.
However, today’s data surprised the markets and provided the lowest reading in a long time, at 4.3%.

Australian Central Bank

The Australian Central Bank, after the bank’s interest rates, reach the highest levels of around 4.35%,
will greatly benefit from the decline in Australian inflation,
and this decline may lead to the bank’s survival during the next meeting scheduled to be held on February 6. At that time,
the idea will be to keep interest rates unchanged against the backdrop of the fear that the tightening will be exaggerated.
Disasters may occur in the Australian economy, in addition to the fact that the monetary tightening followed in 2023 to combat high levels of inflation has borne fruit.

Upcoming US inflation data

This is how the markets will read the upcoming US inflation data.
Data that may put the Federal Reserve in a big dilemma

In its last meeting in 2023, the US Federal Reserve, led by Jerome Powell,
presented to the markets the victory over the high levels of inflation and stated that a reduction in 2024
will be taken into consideration before high-interest rates begin to increase the damage to the US economy.

The next reduction

The US Federal Reserve will strengthen its position in overcoming high inflation
and will benefit if the upcoming data proves an actual decline.
Annual US consumer prices are expected to reach 3.2%, while the previous reading was around 3.1%.
In the next reading, if the decline is less than 3.1%, then it may begin. The Fed reduced interest rates by 0.25%.

Powell’s unenviable position

The idea that US inflation will return to rising will be considered the biggest nightmare for the US Central Bank during the current year. At that time, the markets may have many issues, the most important of which is that the Fed will extend the period during which it may cut the high-interest rate in the event of a reading higher than 3.2% or even a reading around 3.2%. It will be an indication that inflation is rising again, which may put Powell in trouble, and that the markets need more monetary tightening, which may bring us closer to the Federal Reserve’s expectations for a decline in economic growth of around 1.4% instead of 1.5%.

Geopolitical Tensions critical factor influencing financial markets